Up to 1,380,000 Shares (subject to increase up to 1,587,000 shares in the event of an increase in the pro forma market value of the Company’s Common Stock) FRATERNITY COMMUNITY BANCORP, INC. (a Maryland corporation) Common Stock (par value $0.01 per...
Exhibit 1.2
Up to 1,380,000 Shares
(subject to increase up to 1,587,000 shares
in the event of an increase in the pro forma market value
of the Company’s Common Stock)
(subject to increase up to 1,587,000 shares
in the event of an increase in the pro forma market value
of the Company’s Common Stock)
FRATERNITY COMMUNITY BANCORP, INC.
(a Maryland corporation)
(a Maryland corporation)
Common Stock
(par value $0.01 per share)
(par value $0.01 per share)
[Date]
Sandler X’Xxxxx & Partners, L.P.
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Fraternity Community Bancorp, Inc., a Maryland corporation (the “Company”), and
Fraternity Federal Savings and Loan Association, a federal savings bank (the “Bank”),
hereby confirm their agreement with Sandler X’Xxxxx & Partners, L.P. (“Sandler X’Xxxxx” or
the “Agent”) with respect to the offer and sale by the Company of up to 1,380,000 shares of
the Common Stock, par value $0.01 per share (the “Common Stock”) (subject to increase up to
1,587,000 shares in the event of an increase in the pro forma market value of the Common Stock).
The shares of Common Stock to be sold by the Company are hereinafter called the “Securities.”
The Securities are being offered for sale in accordance with the plan of conversion (the
“Plan”) adopted by the Board of Directors of the Bank, pursuant to which the Bank intends
to convert from a federally chartered mutual savings bank to a federally chartered stock savings
bank and issue all of its outstanding capital stock to the Company. Pursuant to the Plan, the
Company is offering the Securities to the Bank’s tax qualified employee benefit plans, including
the Employee Stock Ownership Plan (the “ESOP”) (collectively, the “Employee Plans”)
and to qualifying depositors and borrowers of the Bank, in a subscription offering (the
“Subscription Offering”). To the extent Securities are not subscribed for in the
Subscription Offering, such Securities may be offered to certain members of the general public,
with preference given to persons and trusts for the benefit of persons residing in Baltimore
County, Xxxxxxx County, Xxxxxx County and Baltimore City, Maryland, in a direct community offering
(the “Community Offering”). The Community Offering may be commenced concurrently with,
during or after, the Subscription Offering. It is currently anticipated that any Securities not
subscribed for in the Subscription and Community Offerings will be offered, subject to Section 2
hereof, by a syndicate of broker-dealers in a syndicated community offering (the “Syndicated
Offering”); provided, however, that the Community Offering may occur concurrently with the
Subscription Offering and the Syndicated Offering. The Subscription and Community Offerings and
the Syndicated Community Offering, as each may be extended or reopened from time to time, are
hereinafter referred to collectively as the “Offerings.” The conversion of the Bank from
mutual to stock form, the acquisition of all of the to be issued and outstanding capital stock of
the Bank by the Company and the Offerings are hereinafter referred to collectively as the
“Conversion.” It is acknowledged that the number of Securities to be sold in the
Conversion may be increased or decreased as described in the Prospectus (as hereinafter defined).
If the number of Securities is increased or decreased in accordance with the Plan, the term
“Securities” shall mean such greater or lesser number, where applicable.
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The Company has filed with the Securities and Exchange Commission (the “Commission”) a
registration statement on Form S-1 (No. 333-[ ]), including a related prospectus, for
the registration of the Securities under the Securities Act of 1933, as amended (the
“Securities Act”), has filed such amendments thereto, if any, and such amended prospectuses
as may have been required to the date hereof by the Commission in order to declare such
registration statement effective, and will file such additional amendments thereto and such amended
prospectuses and prospectus supplements as may hereafter be required. Such registration statement
(as amended to date, if applicable, and as from time to time amended or supplemented hereafter) and
the prospectuses constituting a part thereof (including in each case all documents incorporated or
deemed to be incorporated by reference therein and the information, if any, deemed to be a part
thereof pursuant to the rules and regulations of the Commission under the Securities Act, as from
time to time amended or supplemented pursuant to the Securities Act or otherwise (the
“Securities Act Regulations”)), are hereinafter referred to as the “Registration
Statement” and the “Prospectus,” respectively, except that if any revised prospectus
shall be used by the Company in connection with the Offerings which differs from the Prospectus on
file at the Commission at the time the Registration Statement becomes effective (whether or not
such revised prospectus is required to be filed by the Company pursuant to Rule 424(b) or (c) of
the Securities Act Regulations), the term “Prospectus” shall refer to such revised prospectus from
and after the time it is first provided to the Agent for such use.
Concurrently with the execution of this Agreement, the Company is delivering to the Agent
copies of the Prospectus to be used in the Offerings. Such prospectus contains information with
respect to the Bank, the Company and the Securities.
(a) The Company and the Bank jointly and severally represent and warrant to the Agent as of
the date hereof as follows:
(i) The Registration Statement has been declared effective by the Commission, no stop
order has been issued with respect thereto and no proceedings therefor have been initiated
or, to the knowledge of the Company and the Bank, threatened by the Commission. At the time
the Registration Statement became effective and at the Closing Time referred to in Section 2
hereof, the Registration Statement complied and will comply in all material respects with
the requirements of the Securities Act and the Securities Act Regulations and did not and
will not contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not misleading.
The Prospectus at the date hereof does not and at the Closing Time referred to in Section 2
hereof will not include an untrue statement of a material fact or omit to state a material
fact necessary in order to
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make the statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the representations and warranties in this
subsection shall not apply to statements in or omissions from the Registration Statement or
Prospectus made in reliance upon and in conformity with information with respect to the
Agent furnished to the Company in writing by the Agent expressly for use in the Registration
Statement or Prospectus (the “Agent Information,” which the Company and the Bank
acknowledge appears only in the second sentence of the section entitled “Summary-Market for
Fraternity Community Bancorp, Inc.’s Common Stock,” the third sentence of the first
paragraph of the section entitled “Market for the Common Stock” and the second sentence of
the first paragraph of the section entitled “The Conversion and Stock Offering-Marketing
Arrangements” in the Prospectus).
(ii) At the time of filing the Registration Statement and at the date hereof, the
Company was not, and is not, an ineligible issuer, as defined in Rule 405 of the Securities
Act Regulations. At the time of the filing of the Registration Statement and at the time of
the use of any issuer free writing prospectus, as defined in Rule 433(h) of the Securities
Act Regulations, the Company met the conditions required by Rules 164 and 433 of the
Securities Act Regulations for the use of a free writing prospectus. If required to be
filed, the Company has filed any issuer free writing prospectus related to the Securities at
the time it is required to be filed under Rule 433 of the Securities Act Regulations and, if
not required to be filed, will retain such issuer free writing prospectus in the Company’s
records pursuant to Rule 433(g) of the Securities Act Regulations and, if any issuer free
writing prospectus is used after the date hereof in connection with the offering of the
Securities, the Company will file or retain such issuer free writing prospectus as required
by Rule 433 of the Securities Act Regulations.
(iii) As of the Applicable Time, none of the Issuer-Represented General Use Free
Writing Prospectuses issued at or prior to the Applicable Time and the Statutory Prospectus,
all considered together (collectively, the “General Disclosure Package”), included
any untrue statement of a material fact or omitted to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that this representation and warranty shall
not apply to any statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by the Agent expressly for use therein. As
used in this paragraph and elsewhere in this Agreement:
“Applicable Time” means each and every date when a potential purchaser submitted a
subscription or otherwise committed to purchase Securities, and at the Closing Time as defined
herein.
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“Issuer-Represented Free Writing Prospectus” means any “issuer free writing
prospectus,” as defined in Rule 433(h) under the Securities Act Regulations, relating to the
Securities in the form filed or required to be filed with the Commission or, if not required to be
filed, in the form retained in the Company’s records pursuant to Rule 433(g) of the Securities Act
Regulations. The term does not include any writing exempted from the definition of prospectus
pursuant to clause (a) or (b) of Section 2(a)(10) of the Securities Act Regulations.
“Issuer-Represented General Use Free Writing Prospectus” means any Issuer Represented
Free Writing Prospectus that is intended for general distribution to prospective investors.
“Issuer-Represented Limited-Use Free Writing Prospectus” means any Issuer Represented
Free Writing Prospectus that is not an Issuer Represented General Use Free Writing Prospectus. The
term Issuer-Represented Limited-Use Free Writing Prospectus also includes any “bona fide”
electronic road show, as defined in Rule 433 of the Securities Act Regulations, that is made
available without restriction pursuant to Rule 433(d)(8)(ii) of the Securities Act Regulations or
otherwise, even though not required to be filed with the Commission.
“Statutory Prospectus,” as of any time, means the most recent Prospectus that is
included in the Registration Statement or filed pursuant to Rule 424 of the Securities Act
Regulations immediately prior to the Applicable Time, including any document incorporated therein.
(iv) Neither the Company nor the Bank will issue any Issuer-Represented Free Writing
Prospectus prior to completion of the Offerings other than press releases which will not
include any more information therein than permitted by the provisions of Rule 134 of the
Securities Act Regulations and are otherwise not deemed a free writing prospectus as defined
in Rule 405 of the Securities Act Regulations. Neither the Company nor the Bank will issue
prior to completion of the Offerings any Issuer Represented Limited-Use Free Writing
Prospectus without the prior written consent of the Agent, which shall not be unreasonably
withheld. Each Issuer-Represented Free Writing Prospectus, as of its date of first use and
at all subsequent times through the completion of the Offerings and the sale of the
Securities or until any earlier date that the Company notified or notifies the Agent (as
described in the next sentence), did not, does not and will not include any information that
conflicted, conflicts or will conflict with the information contained in the Registration
Statement, including any document incorporated by reference therein that has not been
superseded or modified. If at any time following the date of first use of an
Issuer-Represented Free Writing Prospectus there occurred or occurs an event or development
as a result of which such Issuer-Represented Free Writing Prospectus conflicted or would
conflict with the information contained in the Registration Statement or included or would
include an untrue statement of a material fact or omitted or would omit to state a material
fact necessary in order to
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make the statements therein, in the light of the circumstances prevailing at that
subsequent time, not misleading, the Company has notified or will notify promptly the Agent
so that any use of such Issuer-Represented Free Writing Prospectus may cease until it is
amended or supplemented and the Company has promptly amended or will promptly amend or
supplement such Issuer-Represented Free Writing Prospectus to eliminate or correct such
conflict, untrue statement or omission. The foregoing two sentences do not apply to
statements in or omissions from any Issuer-Represented Free Writing Prospectus based upon
and in conformity with written information furnished to the Company by the Agent
specifically for use therein.
(v) The Company has filed with the Department of the Treasury, Office of Thrift
Supervision (the “OTS”), an application for approval of its acquisition of the Bank
(the “Holding Company Application”) on Form H-(e)1-S promulgated under the savings
and loan holding company provisions of the Home Owners’ Loan Act, as amended
(“HOLA”), and the regulations promulgated thereunder. The Company has received
written notice from the OTS of its approval of the Holding Company Application, such
approval remains in full force and effect and no order has been issued by the OTS suspending
or revoking such approval and no proceedings therefor have been initiated or, to the
knowledge of the Company or the Bank, threatened by the OTS. At the date of such approval
and at the Closing Time referred to in Section 2, the Holding Company Application complied
and will comply in all material respects with the applicable provisions of HOLA and the
regulations promulgated thereunder.
(vi) Pursuant to the rules and regulations of the OTS governing the conversion of
federally chartered mutual savings banks to stock form (the “Conversion
Regulations”), the Bank has filed with the OTS an application for conversion (the
“Conversion”) on Form AC, and has filed such amendments thereto and supplementary
materials as may have been required to the date hereof (such application, as amended to
date, if applicable, and as from time to time amended or supplemented hereafter, is
hereinafter referred to as the “Conversion Application”), including a proxy
statement for the special meeting of members called to approve the Plan (the “Proxy
Statement”), and the Prospectus. The Board of Directors of the Bank has duly adopted
the Plan and such adoption has not been rescinded or revoked. The Conversion Application,
the Proxy Statement and Prospectus have been approved or declared effective by the OTS and
such approvals remain in full force and effect and no order has been issued by the OTS
suspending or revoking such approvals and no proceedings therefor have been initiated or, to
the knowledge of the Company or the Bank, threatened by the OTS. At the date of the
approval of the Conversion Application, including the Proxy Statement and Prospectus, and at
the Closing Time referred to in Section 2, the Conversion Application and the Proxy
Statement and Prospectus complied and will comply in all material
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respects with the applicable provisions of the Conversion Regulations and the
Conversion Application was truthful and accurate in all material respects.
(vii) At the time of their use, the Proxy Statement and any other proxy solicitation
materials will comply in all material respects with the applicable provisions of the
Conversion Regulations and will not contain an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The Company and the Bank will
promptly file the Prospectus and any supplemental sales literature with the Commission and
the OTS. All supplemental sales literature, as of the date the Registration Statement
became effective and at the Closing Time referred to in Section 2, complied and will comply
in all material respects with the applicable requirements of the Conversion Regulations and,
at or prior to the time of their first use, will have received all required authorizations
of the OTS for use in final form.
(viii) None of the Commission, the OTS or any state securities (“Blue Sky”)
authority has, by order or otherwise, prevented or suspended the use of the Proxy Statement,
the Prospectus or any supplemental sales literature authorized by the Company or the Bank
for use in connection with the Offerings, and no action by or before any such governmental
entity to prevent or suspend the use of the Proxy Statement, the Prospectus or any
supplemental sales literature is pending, or to the best knowledge of the Company and the
Bank, threatened.
(ix) At the Closing Time referred to in Section 2, the Company and the Bank will have
completed the conditions precedent to the Conversion of the Bank in accordance with the
Plan, the applicable Conversion Regulations and all other applicable laws, regulations,
decisions and orders, including all material terms, conditions, requirements and provisions
precedent to the Conversion imposed upon the Company or the Bank by the OTS or any other
regulatory authority, other than those which the regulatory authority permits to be
completed after the Conversion.
(x) Xxxxxxx Financial Advisors, Inc. (“Xxxxxxx Financial” or the
“Appraiser”), which prepared the valuation of the Bank as part of the Conversion,
has advised the Company and the Bank in writing that it satisfies all requirements for an
appraiser set forth in the Conversion Regulations and any interpretations or guidelines
issued by the OTS with respect thereto.
(xi) Xxxxxxx & Company, who audited and reported on the financial statements of the
Bank included in the Registration Statement, have advised the Company and the Bank in
writing that they are independent public accountants within the meaning of the Code of
Ethics of the American Institute of Certified Public Accountants (the “AICPA”), and
such accountants are, with respect to the Company and the Bank,
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independent certified public accountants as required by the Securities Act and the
Securities Act Regulations and such accountants are not in violation of the auditors
independence requirements of the Xxxxxxxx-Xxxxx Act of 2002 (the “Xxxxxxxx-Xxxxx
Act”) and the Securities Act of 1934, as amended (the “Exchange Act”), and the
rules and regulations promulgated thereunder (“Exchange Act Regulations”).
(xii) The only direct and indirect subsidiaries of the Bank are Fraternity Insurance
Agency, which is currently inactive, and 000 Xxxxxxxxxx Xxxx, LLC (the
“Subsidiaries”). Except for the Subsidiaries, the Bank does not, directly or
indirectly, control any other corporation, limited liability company, partnership, joint
venture, association, trust or other business organization. Upon completion of the
Conversion, the only direct subsidiary of the Company will be the Bank.
(xiii) The financial statements and the related notes thereto included in the
Registration Statement and the General Disclosure Package, including the Prospectus, present
fairly the financial position of the Bank and the Subsidiaries at the dates indicated and
the results of operations, retained earnings, changes in equity and cash flows for the
periods specified, and comply as to form with the applicable accounting requirements of the
Securities Act Regulations and the Conversion Regulations; except as otherwise stated in the
Registration Statement and Prospectus, said financial statements have been prepared in
conformity with accounting principles generally accepted in the United States applied on a
consistent basis; and the supporting schedules and tables included in the Registration
Statement and Prospectus present fairly the information required to be stated therein. The
other financial, statistical and pro forma information and related notes included in the
General Disclosure Package, including the Prospectus, present fairly the information shown
therein on a basis consistent with the audited and unaudited financial statements included
in the Prospectus, and as to the pro forma adjustments, the adjustments made therein have
been consistently applied on the basis described therein. The capitalization, liabilities,
assets, properties and business of the Company and the Bank conform in all material respects
to the descriptions contained in the General Disclosure Package, including the Prospectus,
and, none of the Company, the Bank nor the either of the Subsidiaries has any material
liabilities of any kind, contingent or otherwise, except as disclosed in the Registration
Statement or the Prospectus or the General Disclosure Package, including the Prospectus.
(xiv) Since the respective dates as of which information is given in the Registration
Statement and the General Disclosure Package, including the Prospectus, except as otherwise
stated therein (A) there has been no material adverse change in the financial condition,
results of operations, business affairs or prospects of the Company, the Bank and the
Subsidiaries considered as one enterprise, whether or not arising in the ordinary course of
business, (B) there has not been any material change in total assets of
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the Company or the Bank on a consolidated basis, any material increase in the aggregate
amount of loans past due ninety (90) days or more, or any real estate acquired by
foreclosure or loans characterized as “in substance foreclosure”; (C) none of the Company or
the Bank have issued any securities or incurred any liability or obligation for borrowings
other than in the ordinary course of business; and (D) except for transactions specifically
referred to or contemplated in the Prospectus, there have been no transactions entered into
by the Company or the Bank, other than those in the ordinary course of business consistent
with past practice, which are material with respect to the Company, the Bank or the
Subsidiaries considered as one enterprise.
(xv) The Company has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the State of Maryland, with corporate power and authority to
own, lease and operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under this Agreement and the
transactions contemplated hereby; and the Company is duly qualified to transact business and
is in good standing in the State of Maryland. The Company is not required to be qualified
as a foreign corporation in any other jurisdiction in order to conduct its business. The
Company will be a registered savings and loan holding company under HOLA.
(xvi) Upon consummation of the Conversion, the issued and outstanding capital stock of
the Company will be within the range as set forth in the Prospectus under “Capitalization”
(except for the inclusion of subsequent issuances of Common Stock, if any, pursuant to
reservations, agreements or employee benefit plans referred to under Capitalization). The
authorized capital stock of the Company consists of 15,000,000 shares of Common Stock, par
value $0.01 per share, and 1,000,000 shares of preferred stock, par value of $0.01 per
share. No shares of Common Stock or other capital stock of the Company have been or will be
issued and outstanding prior to the Closing Time referred to in Section 2; at the Closing
Time, the Securities will have been duly authorized for issuance and, when issued and
delivered by the Company pursuant to the Plan against payment of the consideration
calculated as set forth in the Plan and stated on the cover page of the Prospectus, will be
duly and validly issued and fully paid and non-assessable; the terms and provisions of the
Common Stock and the other capital stock of the Company conform in all material respects to
all statements relating thereto contained in the Prospectus; the certificates representing
the shares of Common Stock will conform to the requirements of applicable law and
regulations; and the issuance of the Securities is not subject to preemptive or other
similar rights, except for subscription rights granted by the Plan in accordance with the
Conversion Regulations.
(xvii) The Bank, as of the date hereof, is a federally chartered savings bank in mutual
form and upon consummation of the Conversion in accordance with the Plan will
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be a federally chartered savings bank in stock form, in both instances with full
corporate power and authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and to enter into and perform its obligations under
this Agreement and the transactions contemplated hereby; the Company, the Bank and the
Subsidiaries have obtained all licenses, permits and other governmental authorizations
currently required for the conduct of their respective businesses or required for the
conduct of their respective businesses as contemplated by the Holding Company Application,
the Conversion Application and the Prospectus, except where the failure to obtain such
licenses, permits or other governmental authorizations would not have a material adverse
effect on the financial condition, results of operations, business affairs or prospects of
the Company, the Bank and the Subsidiaries considered as one enterprise (a “Material
Adverse Effect”); all such licenses, permits and other governmental authorizations are
in full force and effect and the Company, the Bank and the Subsidiaries are in all material
respects in compliance therewith; neither the Company, the Bank nor either of the
Subsidiaries has received notice of any proceeding or action relating to the revocation or
modification of any such license, permit or other governmental authorization which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or finding, might
have a Material Adverse Effect; and the Bank is validly existing and in good standing under
the laws of the United States and is qualified as a foreign corporation in any jurisdiction
in which the failure to so qualify would have a Material Adverse Effect.
(xviii) The deposit accounts of the Bank are insured by the Federal Deposit Insurance
Corporation (the “FDIC”) up to the applicable limits. Upon consummation of the
Conversion, the liquidation account for the benefit of eligible account holders and
supplemental eligible account holders of the Bank will be duly established in accordance
with the requirements of the Plan and the Conversion Regulations. The Bank is a “qualified
thrift lender” within the meaning of 12 U.S.C. Section 1467a(m).
(xix) Upon consummation of the Conversion, the authorized capital stock of the Bank
will be [ ] shares of common stock, par value $1.00 per share (the “Bank Common
Stock”), and [ ] shares of serial preferred stock, par value $1.00 per share,
and the issued and outstanding capital stock of the Bank will be [ ] shares of Bank
Common Stock and no shares of Bank Common Stock have been or will be issued prior to the
Closing Time referred to in Section 2; and as of the Closing Time referred to in Section 2,
all of the issued and outstanding capital stock of the Bank will be duly authorized, validly
issued and fully paid and nonassessable, have been issued in compliance with all federal and
state securities laws and will be owned of record and beneficially by the Company. The
shares of Bank Common Stock to be issued to the Company will have been duly authorized for
issuance and, when issued and delivered by the Bank pursuant to the Plan, against payment of
the consideration calculated as set forth
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in the Plan and as described in the Prospectus will be duly and validly issued and
fully paid and nonassessable, and all such Bank Common Stock will be owned beneficially and
of record by the Company free and clear of any security interest, mortgage, pledge, lien,
encumbrance or legal or equitable claim; the terms and provisions of the Bank Common Stock
conform to all statements relating thereto contained in the Prospectus, and the certificates
representing the shares of the Bank Common Stock will conform with the requirements of
applicable laws and regulations; and the issuance of the Bank Common Stock is not subject to
preemptive or similar rights; and there are no other warrants, options or rights of any kind
to acquire additional shares of Bank Common Stock.
(xx) The Subsidiaries have been duly incorporated or organized, as applicable, and are
validly existing as a corporation and a limited liability company in good standing under the
laws of the jurisdictions of their incorporation or organization, as applicable, have full
power and authority to own, lease and operate their properties and to conduct their business
as described in the Registration Statement and Prospectus, and are duly qualified to
transact business and are in good standing in each jurisdiction in which such qualification
is required, whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify would not have a Material Adverse Effect;
the activities of the Subsidiaries are permitted to subsidiaries of a federally chartered
savings bank and a savings and loan holding company by the rules, regulations, resolutions
and practices of the OTS; all of the issued and outstanding capital stock, if any, of the
Subsidiaries has been duly authorized and validly issued, is fully paid and nonassessable
and is owned by the Bank, directly, free and clear of any security interest, mortgage,
pledge, lien, encumbrance or legal or equitable claim; and there are no warrants, options or
rights of any kind to acquire shares of capital stock of the Subsidiaries.
(xxi) The Company and the Bank have taken all corporate action necessary for them to
execute, deliver and perform this Agreement and the transactions contemplated hereby, and
this Agreement has been duly authorized, executed and delivered by, and is the valid and
binding agreement of, the Company and the Bank, enforceable in accordance with its terms,
except as may be limited by bankruptcy, insolvency or other laws affecting the
enforceability of the rights of creditors generally and judicial limitations on the right of
specific performance and except as the enforceability of indemnification and contribution
provisions may be limited by applicable securities laws.
(xxii) Subsequent to the respective dates as of which information is given in the
Registration Statement and the General Disclosure Package, including the Prospectus, and
prior to the Closing Time, except as otherwise may be indicated or contemplated therein,
neither the Company, the Bank nor the Subsidiaries will have (A) issued any securities or
incurred any liability or obligation, direct or contingent, or borrowed money,
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except borrowings in the ordinary course of business consistent with past practice from
the same or similar sources and in similar amounts as indicated in the Prospectus, or (B)
entered into any transaction or series of transactions which are material in light of the
business of the Company, the Bank and the Subsidiaries, considered as one enterprise,
excluding the origination, purchase and sale of loans or the purchase or sale of investment
securities or mortgaged-backed securities in the ordinary course of business consistent with
past practice.
(xxiii) No approval of any regulatory or supervisory or other public authority is
required in connection with the execution and delivery of this Agreement or the issuance of
the Securities that has not been obtained and a copy of which has been delivered to the
Agent, except as may be required under the “blue sky” or state securities laws of various
jurisdictions.
(xxiv) Neither the Company, the Bank nor either of the Subsidiaries is in violation of
its articles of incorporation, charter or articles of organization, as the case may be, or
bylaws or operating agreement (and the Bank will not be in violation of its charter or
bylaws in stock form upon consummation of the Conversion); and neither the Company, the Bank
nor either of the Subsidiaries is in default (nor has any event occurred which, with notice
or lapse of time or both, would constitute a default) in the performance or observance of
any obligation, agreement, covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which the Company, the Bank or
either of the Subsidiaries is a party or by which it or any of them may be bound, or to
which any of the property or assets of the Company, the Bank or the Subsidiaries is subject,
except for such defaults that would not, individually or in the aggregate, have a Material
Adverse Effect.
(xxv) The consummation of the Conversion, the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated herein do not and will
not conflict with or constitute a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the Company,
the Bank or the Subsidiaries pursuant to, any contract, indenture, mortgage, loan agreement,
note, lease or other instrument to which the Company, the Bank and the Subsidiaries is or
are a party or by which it or any of them may be bound, or to which any of the property or
assets of the Company, the Bank or the Subsidiaries is subject, except for such defaults
that would not, individually or in the aggregate, have a Material Adverse Effect; nor will
such action result in any violation of the provisions of the articles of incorporation or
charter or bylaws of the Company, the Bank or either of the Subsidiaries, as the case may
be, or, except for such violations that would not have a Material Adverse Effect, any
applicable law, administrative regulation or administrative or court decree.
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(xxvi) No labor dispute with the employees of the Company, the Bank or the Subsidiaries
exists or, to the knowledge of the Company or the Bank, is imminent or threatened; and the
Company, the Bank and the Subsidiaries are not aware of any existing or threatened labor
disturbance by the employees of any of its principal suppliers or contractors which might be
expected to result in any Material Adverse Effect.
(xxvii) Each of the Company, the Bank and the Subsidiaries have good and marketable
title to all properties and assets for which ownership is material to the business of the
Company, the Bank or the Subsidiaries and to those properties and assets described in the
General Disclosure Package, including the Prospectus, as owned by them, free and clear of
all liens, charges, encumbrances or restrictions, except such as are described in the
Prospectus or are not material in relation to the business of the Company, the Bank and the
Subsidiaries considered as one enterprise; and all of the leases and subleases material to
the business of the Company, the Bank or the Subsidiaries under which the Company, the Bank
or the Subsidiaries hold properties, including those described in the General Disclosure
Package, including the Prospectus, are valid and binding agreements of the Company, the Bank
and the Subsidiaries in full force and effect, enforceable in accordance with their terms
(except as enforceability may be limited by applicable bankruptcy, insolvency, or other
laws, the rights of creditors generally and judicial limitations on the right of specific
performance and except as the enforceability of indemnification and contribution provisions
may be limited by applicable securities laws.
(xxviii) None of the Company, the Bank nor either of the Subsidiaries is in violation
of any directive from the Commission, the OTS or the FDIC or any other governmental entity
to make any material change in the method of conducting its respective business; the Bank
and the Subsidiaries have conducted and are conducting its business so as to comply with all
applicable statutes, regulations and administrative and court decrees (including, without
limitation, all regulations, decisions, directives and orders of the Commission, the OTS and
the FDIC). Neither the Company, the Bank nor either of the Subsidiaries is subject or is
party to, or has received any notice or advice that any of them may become subject or party
to, any investigation with respect to any cease-and-desist order, agreement, consent
agreement, memorandum of understanding or other regulatory enforcement action, proceeding or
order with or by, or is a party to any commitment letter or similar undertaking to, or is
subject to any directive by, or has been a recipient of any supervisory letter from, or has
adopted any board resolutions at the request of, any Regulatory Agency (as defined below)
that currently restricts the conduct of its business or that in any material manner relates
to its capital adequacy, its credit policies, its management or its business (each, a
“Regulatory Agreement”), nor has the Company, the Bank or either of the Subsidiaries
been advised by any Regulatory Agency that it is considering issuing or requesting any such
Regulatory Agreement; and there is
-13-
no unresolved violation, criticism or exception by any Regulatory Agency with respect
to any report or statement relating to any examinations of the Company, the Bank or the
Subsidiaries which is expected to result in a Material Adverse Effect or which might
materially and adversely affect the properties or assets thereof or which might adversely
affect the consummation of the Conversion or the performance of this Agreement. As used
herein, the term “Regulatory Agency” means any federal or state agency charged with
the supervision or regulation of depositary institutions or holding companies of depositary
institutions, or engaged in the insurance of depositary institution deposits, or any court,
administrative agency or commission or other governmental agency, authority or
instrumentality having supervisory or regulatory authority with respect to the Company, the
Bank or the Subsidiaries.
(xxix) There is no action, suit or proceeding before or by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of the Company, the
Bank or the Subsidiaries, threatened, against or affecting the Company, the Bank or the
Subsidiaries which is required to be disclosed in the Registration Statement or the General
Disclosure Package (other than as disclosed therein), or which might result in any Material
Adverse Effect, or which might materially and adversely affect the properties or assets
thereof or which might materially and adversely affect the consummation of the Conversion or
the performance of this Agreement; all pending legal or governmental proceedings to which
the Company, the Bank or either of the Subsidiaries is a party or of which any of their
respective property or assets is the subject which are not described in the Registration
Statement, including ordinary routine litigation incidental to the business, are considered
in the aggregate not material; and there are no contracts or documents of the Company, the
Bank or the Subsidiaries which are required to be filed as exhibits to the Registration
Statement or the Conversion Application which have not been so filed.
(xxx) The Company and the Bank have obtained opinions of their outside legal and tax
counsel, Xxxxxxxxxx Xxxxxxxx L.L.P. (“Xxxxxxxxxx Xxxxxxxx”), with respect to the
legality of the Securities to be issued and the federal income tax consequences of the
Conversion and the Plan, copies of which are filed as exhibits to the Registration
Statement; all material aspects of the aforesaid tax opinions are accurately summarized in
the Prospectus under “The Conversion and Stock Offering — Material Income Tax
Consequences”; the facts and representations upon which such opinions are based are
truthful, accurate and complete in all material respects; and neither the Bank nor the
Company has taken or will take any action inconsistent therewith.
(xxxi) The Company and the Bank have received an opinion from Xxxxxxx & Company, with
respect to the tax consequences of the Conversion under the laws of the State of Maryland;
the facts and representations upon which such opinion is based are
-14-
truthful, accurate and complete in all material respects; and neither the Bank nor the
Company has taken or will take any action inconsistent therewith.
(xxxii) The Company is not and, upon completion of the Conversion and the Offerings and
sale of the Common Stock and the application of the net proceeds therefrom, will not be,
required to be registered under the Investment Company Act of 1940, as amended.
(xxxiii) All of the loans represented as assets on the most recent financial statements
or in selected financial and other data of the Bank or the Company included in the General
Disclosure Package, including the Prospectus, meet or are exempt from all requirements of
federal, state or local law pertaining to lending, including without limitation truth in
lending (including the requirements of Regulations Z and 12 C.F.R. Part 226 and 12 CFR
563.99), real estate settlement procedures, consumer credit protection, equal credit
opportunity and all disclosure laws applicable to such loans, except for violations which,
if asserted, would not result in a Material Adverse Effect.
(xxxiv) To the knowledge of the Company and the Bank, with the exception of the
intended loan to the ESOP by the Company to enable the ESOP to purchase shares of Common
Stock in an amount of up to 8.0% of the Common Stock issued in the Conversion, none of the
Company, the Bank or employees of the Bank has made any payment of funds of the Company or
the Bank as a loan for the purchase of the Common Stock or made any other payment of funds
prohibited by law, and no funds have been set aside to be used for any payment prohibited by
law.
(xxxv) To the knowledge of the Company, except as previously disclosed to the Agent,
there are no affiliations or associations (as such terms are defined by the Financial
Industry Regulatory Authority (“FINRA”)) between any member of the FINRA and any of
the Company’s or Bank’s officers or directors. Neither the Company nor the Bank has: (i)
issued any securities within the last 18 months (except for notes to evidence bank loans or
other liabilities in the ordinary course of business or as described in the General
Disclosure Package, including the Prospectus); (ii) had any dealings with respect to sales
of securities within the 12 months prior to the date hereof with any member of the FINRA, or
any person related to or associated with such member, other than discussions and meetings
relating to the Offerings and purchases and sales of U.S. government and agency and other
securities in the ordinary course of business; or (iii) engaged any intermediary between the
Agent and the Company and the Bank in connection with the Offerings, and no person is being
compensated in any manner for such services.
(xxxvi) The Company, the Bank and each of the Subsidiaries each carries, or is covered
by, insurance in such amounts and covering such risks as is adequate for the
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conduct of their respective businesses and the value for their respective properties as
is customary for companies engaged in similar industries.
(xxxvii) Each of the Company, the Bank and each of the Subsidiaries maintains a system
of internal accounting controls sufficient to provide reasonable assurance that (a)
transactions are executed in accordance with management’s general or specific
authorizations; (b) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (c) access to assets is permitted only in accordance with
management’s general or specific authorization; and (d) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(xxxviii) The Company, the Bank and the Subsidiaries are in compliance in all material
respects with the applicable financial recordkeeping and reporting requirements of the
Currency and Foreign Transaction Reporting Act of 1970, as amended, and the rules and
regulations thereunder. The Bank has established compliance programs to ensure compliance
with and is in compliance in all material respects with the requirements of the USA Patriot
Act and all applicable regulations promulgated thereunder. There is no charge,
investigation, action, suit or proceeding before any court, regulatory authority or
governmental agency or body pending or, to the best knowledge of the Company and the Bank,
threatened regarding the Bank’s compliance with the USA Patriot Act or any regulations
promulgated thereunder.
(xxxix) The Company and the Bank have not relied on Agent or its counsel for any legal,
tax or accounting advice in connection with the Conversion.
(xl) The records of eligible account holders, supplemental eligible account holders and
other members are accurate and complete in all material respects.
(xli) The Company, the Bank and each of the Subsidiaries are each in compliance in all
material respects with all presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and published interpretations
thereunder (“ERISA”); no “reportable event” (as defined in ERISA) has occurred with
respect to any “pension plan” (as defined in ERISA) for which the Company, the Bank and the
Subsidiaries, respectively, would have any liability; neither the Company, the Bank nor
either of the Subsidiaries has incurred and does expect to incur liability under (i) Title
IV of ERISA with respect to termination of, or withdrawal from, any “pension plan” or (ii)
Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including the
regulations and published interpretations thereunder (the “Code”); and each “pension
plan” for which the Company, the Bank and the Subsidiaries would have any liability that is
intended to be qualified
-16-
under Section 401(a) of the Code is so qualified in all material respects and nothing
has occurred, whether by action or by failure to act, which would cause the loss of such
qualification.
(xlii) Neither the Company, the Bank nor either of the Subsidiaries nor any properties
owned or operated by the Company, the Bank or the Subsidiaries is in violation of or liable
under any Environmental Law (as defined below), except for such violations or liabilities
that, individually or in the aggregate, would not result in a Material Adverse Effect.
There are no actions, suits or proceedings, or demands, claims, notices or investigations
(including, without limitation, notices, demand letters or requests for information from any
environmental agency) instituted or pending, or to the knowledge of the Company or the Bank
threatened, relating to the liability of any property owned or operated by the Company, the
Bank or the Subsidiaries, under any Environmental Law. For purposes of this subsection, the
term “Environmental Law” means any federal, state, local or foreign law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval, consent, order,
judgment, decree, injunction or agreement with any regulatory authority relating to (i) the
protection, preservation or restoration of the environment (including, without limitation,
air, water, vapor, surface water, groundwater, drinking water supply, surface soil,
subsurface soil, plant and animal life or any other natural resource), and/or (ii) the use,
storage, recycling, treatment, generation, transportation, processing, handling, labeling,
production, release or disposal of any substance presently listed, defined, designated or
classified as hazardous, toxic, radioactive or dangerous, or otherwise regulated, whether by
type or by quantity, including any material containing any such substance as a component.
(xliii) The Company, the Bank and the Subsidiaries have timely filed all federal, state
and local income and franchise tax returns required to be filed and have made timely
payments of all taxes shown as due and payable in respect of such returns, and no deficiency
has been asserted with respect thereto by any taxing authority. The Company and the Bank
have no knowledge of any tax deficiency which has been asserted or could be asserted against
the Company, the Bank or the Subsidiaries.
(xliv) The Company has, or will have, received all approvals required to consummate the
Offerings effective as of the Closing Time referred to in Section 2 hereof.
(xlv) The Company has filed, or will file, a registration statement for the Common
Stock under Section 12(g) of the Exchange Act and such registration statement has been or
will be declared effective on or prior to the Closing Time.
-17-
(xlvi) The Company is in compliance with the applicable provisions of the
Xxxxxxxx-Xxxxx Act and will use its best efforts to comply with those provisions of the
Xxxxxxxx-Xxxxx Act that will become effective in the future upon their effectiveness.
(xlvii) There is no contract or other document of a character required to be described
in the Registration Statement or the General Disclosure Package, including the Prospectus,
or to be filed as an exhibit to the Registration Statement or Conversion Application which
is not described or filed as required.
(xlviii) At the time the Company’s securities are registered pursuant to Section 12 of
the Exchange Act, the Company shall have established and will maintain disclosure controls
and procedures (as such term is defined in Rule 13a-14 and 15d-14 under the Exchange Act);
which (A) are designed to ensure that material information relating to the Company including
its consolidated subsidiaries, is made known to the Company’s principal executive officer
and its principal financial officer by others within those entities, (B) have been (or will
be) evaluated for effectiveness as of a date within 90 days prior to the filing of the
Company’s most recent annual or quarterly report filed with the Commission and (C) are
effective in all material respects to perform the functions for which they were established.
The Company’s auditors and the Audit Committee of the Board of Directors have been advised
of: (i) any significant deficiencies in the design or operation of internal controls which
could adversely affect the Company’s ability to record, process, summarize, and report
financial data and (ii) any fraud, whether or not material, that involves management or
other employees who have a role in the Company’s internal controls; and such deficiencies or
fraud have either been disclosed in the Prospectus and the General Disclosure Package or are
not material to the Company and the Bank considered as one enterprise; and since the date of
the most recent evaluation of such disclosure controls and procedures, there have been no
significant changes in internal controls or in other factors that could significantly affect
internal controls, including any corrective actions with regard to significant deficiencies,
material weaknesses or fraud.
(xlix) Except as described in the General Disclosure Package, including the Prospectus,
there are no contractual encumbrances or contractual restrictions or regulatory restrictions
on the ability (i) of the Company, the Bank or the Subsidiaries to pay dividends or make any
other distributions on the Company’s, the Bank’s or the Subsidiaries’ capital stock (with
respect to the Bank, subsequent to the Closing Time) or (ii) of the Company, the Bank or the
Subsidiaries (A) to pay any indebtedness owed to the Company, the Bank or the Subsidiaries,
or (B) to make any loans or advances to, or investments in, the Company, the Bank or the
Subsidiaries, or (C) to transfer any of its property or assets to the Company, the Bank or
the Subsidiaries.
-18-
(l) The Bank has properly administered all accounts for which it acts as a fiduciary,
including but not limited to accounts for which it serves as a trustee, agent, custodian,
personal representative, guardian, conservator or investment advisor, in accordance with the
terms of the governing documents and applicable state and federal law and regulation, except
where the failure to be in compliance would not have a Material Adverse Effect. Neither the
Bank nor any of its respective directors, officers or employees has committed any material
breach of trust with respect to any such fiduciary account, and the accountings for each
such fiduciary account are true and correct in all material respects and accurately reflect
the assets of such fiduciary account in all material respects. [Applicable if the bank has
fiduciary accounts.]
(b) Any certificate signed by any officer of the Company or the Bank and delivered to either
of the Agent or counsel for the Agent shall be deemed a representation and warranty by the Company
or the Bank to the Agent and, for purposes of the opinion to be delivered to the Agent pursuant to
Section 5(b)(2) hereof, to the counsel for the Agent as to the matters covered thereby.
On the basis of the representations and warranties herein contained and subject to the terms
and conditions herein set forth, the Company and the Bank hereby appoint Sandler X’Xxxxx as their
Agent to consult with and advise the Company and the Bank, and to assist the Company and the Bank
with the solicitation of subscriptions and purchase orders for Securities, in connection with the
Company’s sale of Common Stock in the Offerings. On the basis of the representations and
warranties herein contained, and subject to the terms and conditions herein set forth, Sandler
X’Xxxxx accepts such appointment and agrees to use its best efforts to assist the Company and the
Bank with the solicitation of subscriptions and purchase orders for Securities in accordance with
this Agreement; provided, however, that the Agent shall not be obligated to take any action which
is inconsistent with any applicable laws, regulations, decisions or orders. The services to be
rendered by Sandler X’Xxxxx pursuant to this appointment include the following: (A) as to Sandler
X’Xxxxx in the Subscription Offering and Community Offering, (i) consulting as to the financial and
securities marketing implications of the Plan and related corporate documents; (ii) reviewing with
the Board of Directors of the Company and the Bank the financial impact of the offering on the
Company and the Bank based on the independent appraiser’s appraisal of the Common Stock; (iii)
reviewing all offering documents, including the Prospectus, stock order forms and related offering
materials (it being understood that preparation and filing of such documents is the sole
responsibility of the Company and its counsel); (iv) assisting in the design and implementation of
a marketing strategy for the offering; (v) assisting management of the Company in scheduling and
preparing for meetings with potential investors in connection with the offering; and (vi) providing
such other general advice and assistance as may be requested to promote the successful completion
of the offering; and (B) as to Sandler
-19-
X’Xxxxx in the Syndicated Offering, soliciting offers to purchase the Common Stock in the
Syndicated Offering.
The appointment of the Agent hereunder shall terminate upon the earlier to occur of (a)
forty-five (45) days after the last day of the Offerings, unless the Company and the Agent agree in
writing to extend such period and the OTS agrees to extend the period of time in which the
Securities may be sold, (b) the receipt and acceptance of subscriptions and purchase orders for all
of the Securities, or (c) the completion of the Syndicated Offering.
If any of the Securities remain available after the expiration of the Subscription Offering
and Community Offering, at the request of the Company and the Bank, the Agent will seek to form a
syndicate of registered brokers or dealers (“Selected Dealers”) to assist in the
solicitation of purchase orders of such Securities on a best efforts basis, subject to the terms
and conditions set forth in a master selling agreement (the “Selected Dealers Agreement”),
substantially in the form set forth in Exhibit A to this Agreement. Sandler X’Xxxxx will
serve as sole lead manager of the Syndicated Offering. The Agent will endeavor to distribute the
Securities among the Selected Dealers in a fashion that best meets the distribution objectives of
the Company and the Bank and the requirements of the Plan, which may result in limiting the
allocation of stock to certain Selected Dealers. It is understood that in no event shall the Agent
be obligated to act as a Selected Dealer or to take or purchase any Securities.
In the event the Company is unable to sell at least the total minimum of the Securities, as
set forth on the cover page of the Prospectus, within the period herein provided, this Agreement
shall terminate and the Company shall refund to any persons who have subscribed for any of the
Securities the full amount which it may have received from them, together with interest as provided
in the Prospectus, and no party to this Agreement shall have any obligation to the others
hereunder, except for the obligations of the Company and the Bank as set forth in Sections 4, 6(a)
and 7 hereof and the obligations of the Agent as provided in Sections 6(b) and 7 hereof.
Appropriate arrangements for placing the funds received from subscriptions for Securities or other
offers to purchase Securities in special interest-bearing accounts with the Bank until all
Securities are sold and paid for were made prior to the commencement of the Subscription Offering,
with provision for refund to the purchasers as set forth above, or for delivery to the Company if
the total minimum of the Securities are sold.
If at least the total minimum of Securities, as set forth on the cover page of the Prospectus,
are sold, the Company agrees to issue or have issued the Securities sold and to release for
delivery certificates for such Securities at the Closing Time against payment therefor by release
of funds from the special interest-bearing accounts referred to above or from the release of funds
from deposit accounts maintained at the Bank by subscribers in the Subscription Offering, if so
directed by such subscribers. The closing shall be held at the offices of SNR Xxxxxx US LLP
(“SNR Xxxxxx”), Washington, DC, at 10:00 a.m., Eastern Time, or at such other
-20-
place and time as shall be agreed upon by the parties hereto, on a business day to be agreed
upon by the parties hereto. The Company shall notify the Agent by telephone, confirmed in writing,
when funds shall have been received for all the Securities. Certificates for Securities shall be
delivered directly to the purchasers thereof in accordance with their directions. The hour and
date upon which the Company shall release for delivery all of the Securities, in accordance with
the terms hereof, is herein called the “Closing Time.”
The Company will pay any stock issue and transfer taxes which may be payable with respect to
the sale of the Securities.
In addition to the reimbursement of the expenses specified in Section 4 hereof, (A) the Agent
will receive, as compensation for its services hereunder, (i) a fee of one percent (1.00%) of the
aggregate Actual Purchase Price of the shares of Common Stock sold in the Subscription Offering and
Community Offering, excluding in each case shares purchased by (a) any employee benefit plan of the
Company established for the benefit of their respective directors, officers and employees, (b) any
charitable foundation established by the Company (or any shares contributed to such a charitable
foundation), and (c) any director, officer or employee of the Company or members of their immediate
families; provided, however, that the aggregate fee payable pursuant to this paragraph shall not be
less than $160,000 (for purposes of this Agreement, the term “Actual Purchase Price” shall mean the
price at which the Securities are sold in the Offerings). In recognition of the long lead times
involved in the conversion process, the Company and the Bank will or have made advance payments of
$25,000 upon execution of the engagement letter dated October 15, 2010 by and between the Agent and
the Company and the Bank (“Engagement Letter Agreement”) and $25,000 upon commencement of
the mailing of offering materials to the Bank’s depositors, which shall be credited against any
fees or reimbursement of documented expenses actually incurred which are payable hereunder. To the
extent that the actual expenses incurred or fees due hereunder aggregate less than such amount,
Agent will reimburse such excess amount to the Company and the Bank; and (B) with respect to any
Securities sold by the Agent or any other FINRA member firm in any Syndicated Offering, (i) a
management fee to the Agent of one percent (1.00%) of the aggregate Actual Purchase Price of the
Securities sold in the Syndicated Offering; and (ii) a selling concession, set forth in the
Selected Dealers Agreement, not to exceed six percent (6.00%) of the aggregate Actual Purchase
Price of the shares of Common Stock sold in the Syndicated Offering, which shall be allocated to
dealers (including the Agent) in accordance with the actual number of shares of Common Stock sold
by such dealers.
If this Agreement is terminated by the Agent in accordance with the provisions of Section 9(a)
hereof or the Conversion is terminated by the Company, no fee shall be payable by the Company and
the Bank to Sandler X’Xxxxx; provided, however, that the Company and the Bank shall reimburse the
Agent for all of its documented out-of-pocket expenses actually incurred prior to termination,
including the reasonable fees and disbursements of counsel for the Agent in
-21-
accordance with the provisions of Section 4 hereof. In addition, the Company and the Bank
shall be obligated to pay the fees and expenses as contemplated by the provisions of Section 4
hereof in the event of any such termination.
All fees payable to the Agent hereunder shall be payable in immediately available funds at
Closing Time, or upon the termination of this Agreement, as the case may be.
Section 3. Covenants of the Company. The Company and the Bank covenant with the Agent as follows:
(a) The Company and the Bank will prepare and file such amendments or supplements to the
Registration Statement, the Prospectus, the Conversion Application and the Proxy Statement as may
hereafter be required by the Securities Act Regulations or the Conversion Regulations or as may
hereafter be requested by the Agent. Following completion of the Subscription and Community
Offerings, in the event of a Syndicated Offering, the Company and the Bank will (i) promptly
prepare and file with the Commission a post-effective amendment to the Registration Statement
relating to the results of the Offerings, any additional information with respect to the proposed
plan of distribution and any revised pricing information or (ii) if no such post-effective
amendment is required, will, if required, file with the Commission a prospectus or prospectus
supplement containing information relating to the results of the Subscription and Community
Offerings and pricing information pursuant to Rule 424 of the Securities Act Regulations, in either
case in a form acceptable to the Agent. The Company and the Bank will notify the Agent
immediately, and confirm the notice in writing, (i) of the effectiveness of any post-effective
amendment of the Registration Statement, the filing of any supplement to the Prospectus and the
filing of any amendment to the Conversion Application, (ii) of the receipt of any comments from the
OTS or the Commission with respect to the transactions contemplated by this Agreement or the Plan,
(iii) of any request by the Commission or the OTS for any amendment to the Registration Statement
or the Conversion Application or any amendment or supplement to the Prospectus or for additional
information, (iv) of the issuance by the OTS of any order suspending the Offerings or the use of
the Prospectus or the initiation of any proceedings for that purpose, (v) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration Statement or
suspending the use of the Prospectus or any Issuer-Represented Free Writing Prospectus or the
initiation of any proceedings for that purpose, and (vi) of the receipt of any notice with respect
to the suspension of any qualification of the Securities for offering or sale in any jurisdiction.
The Company and the Bank will make every reasonable effort to prevent the issuance of any stop
order and, if any stop order is issued, to obtain the lifting thereof at the earliest possible
moment.
(b) If at any time following issuance of an Issuer-Represented Free Writing Prospectus there
occurred or occurs an event or development as a result of which such Issuer-Represented Free
Writing Prospectus conflicted or would conflict with the information contained
-22-
in the Registration Statement or included or would include an untrue statement of a material
fact or omitted or would omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances prevailing at that subsequent time, not misleading, the
Company has notified or will notify promptly the Agent so that any use of such Issuer-Represented
Free Writing Prospectus may cease until it is amended or supplemented and the Company has promptly
amended or will promptly amend or supplement such Issuer-Represented Free Writing Prospectus to
eliminate or correct such conflict, untrue statement or omission; provided, however, that this
covenant shall not apply to any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by the Agent expressly for use therein.
(c) The Company represents and agrees that, unless it obtains the prior written consent of the
Agent, and the Agent represents and agrees that, unless it obtains the prior written consent of the
Company, it has not made and will not make any offer relating to the Securities that would
constitute an “issuer free writing prospectus,” as defined in Rule 433 of the Security Act
Regulations, or that would constitute a “free writing prospectus,” as defined in Rule 405 of the
Securities Act Regulations, required to be filed with the Commission. Any such free writing
prospectus consented to by the Company and the Agent is hereinafter referred to as a “Permitted
Free Writing Prospectus.” The Company represents that it has treated or agrees that it will treat
each Permitted Free Writing prospectus as an “issuer free writing prospectus,” as defined in Rule
433 of the Security Act Regulations, and has complied and will comply with the requirements of Rule
433 applicable to any Permitted Free Writing Prospectus, including timely filing with the
Commission where required, legending and record keeping. The Company represents that it has
satisfied the conditions in Rule 433 to avoid a requirement to file with the Commission any
electronic road show.
(d) The Company and the Bank will give the Agent notice of their intention to file or prepare
any amendment to the Holding Company Application, the Conversion Application or Registration
Statement (including any post-effective amendment) or any amendment or supplement to the Prospectus
(including any revised prospectus which the Company proposes for use in connection with the
Syndicated Offering or otherwise which differs from the prospectus on file at the Commission at the
time the Registration Statement becomes effective, whether or not such revised prospectus is
required to be filed pursuant to Rule 424(b) or (c) of the Securities Act Regulations), will
furnish the Agent with copies of any such amendment or supplement a reasonable amount of time prior
to such proposed filing or use, as the case may be, and will not file any such amendment or
supplement or use any such prospectus to which the Agent or counsel for the Agent may object.
(e) The Company and the Bank will deliver to the Agent as many signed copies and as many
conformed copies of the Holding Company Application, the Conversion Application and the
Registration Statement as originally filed and of each amendment thereto (including
-23-
exhibits filed therewith or incorporated by reference therein) as the Agent may reasonably
request, and from time to time such number of copies of the Prospectus as the Agent may reasonably
request.
(f) During the period when the Prospectus is required to be delivered, the Company and the
Bank will comply, at their own expense, with all requirements imposed upon them by the OTS, by the
applicable Conversion Regulations, as from time to time in force, and by the OTC Bulletin Board,
the Securities Act, the Securities Act Regulations, the Exchange Act, and the rules and regulations
of the Commission promulgated thereunder, including, without limitation, Regulation M under the
Exchange Act, so far as necessary to permit the continuance of sales or dealing in shares of Common
Stock during such period in accordance with the provisions hereof and the Prospectus.
(g) If any event or circumstance shall occur as a result of which it is necessary, in the
opinion of counsel for the Agent, to amend or supplement the Prospectus in order to make the
Prospectus not misleading in the light of the circumstances existing at the time it is delivered to
a purchaser, the Company and the Bank will forthwith amend or supplement the Prospectus (in form
and substance satisfactory to counsel for the Agent) so that, as so amended or supplemented the
Prospectus will not include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the circumstances existing at
the time it is delivered to a purchaser, not misleading, and the Company and the Bank will furnish
to the Agent a reasonable number of copies of such amendment or supplement. For the purpose of
this subsection, the Company and the Bank will each furnish such information with respect to itself
as the Agent may from time to time reasonably request.
(h) The Company and the Bank will take all necessary action, in cooperation with the Agent, to
qualify the Securities for offering and sale under the applicable securities laws of such states of
the United States and other jurisdictions as the Conversion Regulations may require and as the
Agent and the Company have agreed; provided, however, that the Company and the Bank shall not be
obligated to file any general consent to service of process or to qualify as a foreign corporation
in any jurisdiction in which it is not so qualified. In each jurisdiction in which the Securities
have been so qualified, the Company and the Bank will file such statements and reports as may be
required by the laws of such jurisdiction to continue such qualification in effect for a period of
not less than one year from the effective date of the Registration Statement.
(i) The Company authorizes Sandler X’Xxxxx to act as agent of the Company in distributing the
Prospectus to persons entitled to receive subscription rights and other persons to be offered
Securities having record addresses in the states or jurisdictions set forth in a survey of the
securities or “blue sky” laws of the various jurisdictions in which the Offerings will be made (the
“Blue Sky Survey”).
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(j) The Company will make generally available to its security holders as soon as
practicable, but not later than 60 days after the close of the period covered thereby, an earnings
statement (in form complying with the provisions of Rule 158 of the 1933 Act Regulations) covering
a twelve month period beginning not later than the first day of the Company’s fiscal quarter next
following the “effective date” (as defined in Rule 158 of the Securities Act Regulations) of the
Registration Statement that will satisfy the provisions of Section 11(a) of the Securities Act.
(k) During the period ending on the third anniversary of the expiration of the fiscal year
during which the closing of the transactions contemplated hereby occurs, the Company will furnish
to its stockholders as soon as practicable after the end of each such fiscal year an annual report
(including consolidated balance sheets and consolidated statements of income, stockholders’ equity
and cash flows, certified by an independent registered public accounting firm) and, as soon as
practicable after the end of each of the first three quarters of each fiscal year (beginning with
the fiscal quarter ending after the effective date of the Registration Statement), consolidated
summary financial information of the Company and the Bank for such quarter in reasonable detail.
In addition, such annual report and quarterly consolidated summary financial information shall be
made public through the issuance of appropriate press releases at the same time or prior to the
time of the furnishing thereof to stockholders of the Company.
(l) During the period ending on the third anniversary of the expiration of the fiscal year
during which the closing of the transactions contemplated hereby occurs, the Company will furnish
to the Agent (i) as soon as publicly available, a copy of each report or other document of the
Company furnished generally to stockholders of the Company or furnished to or filed with the
Commission under the Exchange Act or any national securities exchange or system on which any class
of securities of the Company is listed or quoted, and (ii) from time to time, such other
information concerning the Company as the Agent may reasonably request. For purposes of this
paragraph, any document filed electronically with the Commission shall be deemed furnished to the
Agent.
(m) The Company and the Bank will conduct the Conversion in all material respects in
accordance with the Plan, the Conversion Regulations and all other applicable regulations,
decisions and orders, including all applicable terms, requirements and conditions precedent to the
Conversion imposed upon the Company or the Bank by the OTS.
(n) The Company and the Bank will use the net proceeds received by it from the sale of the
Securities in the manner specified in the Prospectus under “Use of Proceeds.”
(o) The Company will report the use of proceeds from the Offerings on its first periodic
report filed with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act and on any
subsequent periodic reports as may be required pursuant to Rule 463 of the Securities Act
Regulations.
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(p) The Company will maintain the effectiveness of the Exchange Act Registration Statement for
not less than three years and will comply in all material respects with its filing obligations
under the Exchange Act. The Company will use its best efforts to effect and maintain the listing
for quotation the Common Stock on the OTC Bulletin Board for not less than three years and, once
listed on the OTC Bulletin Board, the Company will comply with all applicable corporate governance
standards, if any, required by the OTC Bulletin Board. The Company will file with the OTC Bulletin
Board all documents and notices required by the OTC Bulletin Board of companies that have issued
securities that are traded on the OTC Bulletin Board.
(q) The Company and the Bank will take such actions and furnish such information as are
reasonably requested by the Agent in order for the Agent to ensure compliance with Rule 2790 of the
FINRA’s Conduct Rules and all related rules.
(r) Other than in connection with any employee benefit plan or arrangement described in the
Prospectus, the Company will not, without the prior written consent of the Agent, sell or issue,
contract to sell or otherwise dispose of, any shares of Common Stock other than the Securities for
a period of 180 days following the Closing Time.
(s) During the period beginning on the date hereof and ending on the later of the third
anniversary of the Closing Time or the date on which the Agent receives full payment in
satisfaction of any claim for indemnification or contribution to which it may be entitled pursuant
to Sections 6 or 7 made prior to the third anniversary of the Closing Time, respectively, neither
the Company nor the Bank shall, without the prior written consent of the Agent, take or permit to
be taken any action that could result in the Bank Common Stock becoming subject to any security
interest, mortgage, pledge, lien or encumbrance.
(t) The Company and the Bank will comply with the conditions imposed by or agreed to with the
OTS in connection with its approval of the Holding Company Application and the Conversion
Application.
(u) The Company shall not deliver the Securities until the Company and the Bank have satisfied
each condition set forth in Section 5 hereof, unless such condition is waived in writing by the
Agent.
(v) The Company or the Bank will furnish to Sandler X’Xxxxx as early as practicable prior to
the Closing Date, but no later than two (2) full business days prior thereto, a copy of the latest
available unaudited interim financial statements of the Bank which have been read by Xxxxxxx &
Company, as stated in their letters to be furnished pursuant to subsections (f) and (g) of Section
5 hereof.
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(w) During the period in which the Prospectus is required to be delivered, each of the Company
and the Bank will conduct its business in compliance in all material respects with all applicable
federal and state laws, rules, regulations, decisions, directives and orders, including all
decisions, directives and orders of the Commission and the OTS.
(x) The Bank will not amend the Plan in any manner that would affect the sale of the
Securities or the terms of this Agreement without the consent of the Agent.
(y) The Company and the Bank will not, prior to the Closing Time, incur any liability or
obligation, direct or contingent, or enter into any material transaction, other than in the
ordinary course of business consistent with past practice, except as contemplated by the
Prospectus.
(z) The Company and the Bank will use all reasonable efforts to comply with, or cause to be
complied with, the conditions precedent to the several obligations of the Agent specified in
Section 5 hereof.
(aa) The Company and the Bank will provide the Agent with any information necessary to carry
out the allocation of the Securities in the event of an oversubscription, and such information will
be accurate and reliable in all material respects.
(bb) The Company and the Bank will notify the Agent when funds have been received for the
minimum number of Securities set forth in the Prospectus.
Section 4. Payment of Expenses. The Company and the Bank jointly and severally agree to pay all expenses
incident to the performance of their obligations under this Agreement, including but not limited to
(i) the cost of obtaining all securities and bank regulatory approvals, including any required
FINRA filing fees, (ii) the preparation, printing and filing of the Registration Statement, the
Conversion Application and the Holding Company Application, each as originally filed and of each
amendment thereto, (iii) the preparation, issuance and delivery of the certificates for the
Securities to the purchasers in the Offerings, (iv) the fees and disbursements of the Company’s and
the Bank’s counsel, accountants, appraiser and other advisors, (v) the qualification of the
Securities under securities laws in accordance with the provisions of Section 3(h) hereof,
including filing fees and the fees and disbursements of the Company’s counsel in connection
therewith and in connection with the preparation of the Blue Sky Survey, (vi) the printing and
delivery to the Agent (in such quantities as the Agent shall reasonably request) of copies of the
Registration Statement as originally filed and of each amendment thereto and the printing and
delivery of the Prospectus and any amendments or supplements thereto to the purchasers in the
Offerings and the Agent (in such quantities as the Agent shall reasonably request), (vii) the
printing and delivery to the Agent of copies of a Blue Sky Survey, (viii) the fees and expenses
incurred in connection with the listing of the Securities on the OTC Bulletin Board, and (ix) the
establishment and operational expense of the conversion center. In the event
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the Agent actually incurs any such fees and expenses on behalf of the Bank or the Company, the Bank
will reimburse the Agent for such fees and expenses whether or not the Conversion is consummated;
provided, however, that the Agent shall not incur any substantial expenses on behalf of the Bank or
the Company pursuant to this Section without the prior approval of the Bank.
The Company and the Bank jointly and severally agree to pay certain expenses incident to the
performance of the Agent’s obligations under this Agreement, regardless of whether the Conversion
is consummated, including (i) the filing fees paid or incurred by the Agent in connection with all
filings with the FINRA, and (ii) all reasonable documented out of pocket expenses actually incurred
by the Agent relating to the Offerings, including, without limitation, advertising, promotional,
syndication and travel expenses and fees and expenses of the Agent’s counsel, up to an aggregate
maximum of $75,000. All fees and expenses to which the Agent is entitled to reimbursement under
this paragraph of this Section 4 shall be due and payable upon receipt by the Company or the Bank
of a written accounting therefor setting forth in reasonable detail the expenses actually incurred
by the Agent.
Section 5. Conditions of Agent’s Obligations. The Company, the Bank and the Agent agree that the issuance and
the sale of Securities and all obligations of the Agent hereunder are subject to the accuracy of
the representations and warranties of the Company and the Bank herein contained as of the date
hereof and the Closing Time, to the accuracy of the statements of officers and directors of the
Company and the Bank made pursuant to the provisions hereof, to the performance by the Company and
the Bank of their obligations hereunder, and to the following further conditions:
(a) No stop order suspending the effectiveness of the Registration Statement shall have been
issued under the Securities Act or proceedings therefor initiated or threatened by the Commission,
no order suspending the Offerings or authorization for final use of the Prospectus shall have been
issued or proceedings therefor initiated or threatened by the OTS and no order suspending the sale
of the Securities in any jurisdiction shall have been issued.
(b) At Closing Time, the Agent shall have received:
(1) The favorable opinion, dated as of Closing Time, of Xxxxxxxxxx Xxxxxxxx, counsel
for the Company and the Bank, in form and substance satisfactory to counsel for the
Agent, to the effect set forth in Appendix A.
(2) The favorable opinion, dated as of Closing Time, of SNR Xxxxxx, counsel for the
Agent, with respect to the matters set forth in clauses (i), (ii), (v), (vii),
(viii) (solely as to preemptive rights arising by operation of law), (xv), (xvi) and
(xviii) of Appendix A and such other matters as the Agent may reasonably require.
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(3) In giving their opinions required by subsections (b)(l) and (b)(2),
respectively, of this Section, Xxxxxxxxxx Xxxxxxxx and SNR Xxxxxx shall each
additionally state that nothing has come to their attention that would lead them to
believe that the Registration Statement (except for financial statements and
schedules, notes to financial statements, stock valuation information and other
financial or statistical data included therein or omitted therefrom, as to which
counsel need make no statement), at the time it became effective, contained an
untrue statement of a material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein not misleading or that
the Prospectus (except for financial statements and schedules, notes to financial
statements, stock valuation information and other financial or statistical data
included therein or omitted therefrom, as to which counsel need make no statement),
at the time the Registration Statement became effective or at the Closing Time, or
that the General Disclosure Package as of the Applicable Time, included or includes
an untrue statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. To the extent not inconsistent with the
assumptions, qualifications and limitations which shall be set forth in the opinion,
the opinions of Xxxxxxxxxx Xxxxxxxx and SNR Xxxxxx will be governed by, and shall be
interpreted in accordance with, the Legal Opinion Accord (the “Accord”) of
the American Bar Association Section of Business Law (1991). The clause “to
counsel’s knowledge,” “to such counsel’s actual knowledge” or similar terms used in
said opinion shall have the meaning set forth in the Accord for the term “Actual
Knowledge.” In giving their opinions, Xxxxxxxxxx Xxxxxxxx and SNR Xxxxxx may rely as
to matters of fact on certificates of officers and directors of the Company and the
Bank and certificates of public officials, and SNR Xxxxxx may also rely on the
opinion of Xxxxxxxxxx Xxxxxxxx.
(c) At Closing Time referred to in Section 2, the Company and the Bank shall have completed in
all material respects the conditions precedent to the Conversion in accordance with the Plan, the
applicable Conversion Regulations and all other applicable laws, regulations, decisions and orders,
including all terms, conditions, requirements and provisions precedent to the Conversion imposed
upon the Company or the Bank by the OTS, or any other regulatory authority other than those which
the OTS permits to be completed after the Conversion.
(d) At Closing Time, there shall not have been, since the date hereof or since the respective
dates as of which information is given in the Registration Statement and the General Disclosure
Package, including the Prospectus, any material adverse change in the financial condition, results
of operations, business affairs or prospects of the Company, the Bank and the Subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of business consistent
with past practice, and the Agent shall have received a certificate of the
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Chairman and Chief Executive Officer and the President and Chief Operating Officer of the
Company and of the Bank, dated as of Closing Time, to the effect that (i) there has been no such
material adverse change, (ii) there shall have been no material transaction entered into by the
Company, the Bank or the Subsidiaries from the latest date as of which the financial condition of
the Company or the Bank as set forth in the Registration Statement and the General Disclosure
Package, including the Prospectus, other than transactions referred to or contemplated therein and
transactions in the ordinary course of business consistent with past practice, (iii) neither the
Company nor the Bank shall have received from the OTS or the FDIC any order or direction (oral or
written) to make any material change in the method of conducting its business with which it has not
complied (which order or direction, if any, shall have been disclosed to the Agent) or which
materially and adversely would affect the business affairs, financial condition, results of
operations or prospects of the Company or the Bank, (iv) the representations and warranties in
Section 1 hereof are true and correct with the same force and effect as though expressly made at
and as of the Closing Time, (v) each of the Company and the Bank has complied with all agreements
and satisfied all conditions on their part to be performed or satisfied at or prior to Closing
Time, (vi) no stop order suspending the effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been initiated or threatened by the Commission and (vii)
no order suspending the Subscription and Community Offerings or Syndicated Offering or the
authorization for final use of the Prospectus has been issued and no proceedings for that purpose
have been initiated or threatened by the OTS and no person has sought to obtain regulatory or
judicial review of the action of the OTS in approving the Plan in accordance with the Conversion
Regulations nor has any person sought to obtain regulatory or judicial review of the action of the
OTS in approving the Holding Company Application.
(e) At the Closing Time, the Agent shall have received a certificate of the Chairman and Chief
Executive Officer and the President and Chief Operating Officer of the Company and of the Bank,
dated as of Closing Time, to the effect that (i) they have reviewed the contents of the
Registration Statement and the Prospectus and the General Disclosure Package; (ii) based on their
knowledge, the Registration Statement and the General Disclosure Package, including the Prospectus,
do not contain any untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements made therein, in light of the circumstances under which such
statements were made, not misleading; (iii) based on their knowledge, the financial statements and
other financial information included in the Registration Statement and the Prospectus and the
General Disclosure Package fairly present the financial condition and results of operations of the
Bank as of and for the dates and periods covered by the Registration Statement and the Prospectus;
(iv) they are responsible for establishing and maintaining internal controls; (v) they have
designed such internal controls to ensure that material information relating to the Company and the
Bank is made known to them; (vi) they have evaluated the effectiveness of their internal controls;
and (vii) they have disclosed to Xxxxxxx & Company and the audit committee (A) all significant
deficiencies in the design or operation of internal controls
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which could adversely affect the Company’s and the Bank’s ability to record, process,
summarize, and report financial data, and have identified for the Company’s and the Bank’s auditors
any material weaknesses in internal controls and (B) any fraud, whether or not material, that
involves management or other employees who have a significant role in the Company’s and the Bank’s
internal controls.
(f) At the time of the execution of this Agreement, the Agent shall have received from Xxxxxxx
& Company a letter dated such date, in form and substance satisfactory to the Agent, to the effect
that (i) they are independent public accountants with respect to the Company and the Bank within
the meaning of the Code of Ethics of the American Institute of Certified Public Accountants, the
Securities Act, the Securities Act Regulations, and the Conversion Regulations and they are
registered with the PCAOB, they are not in violation of the auditor independence requirements of
the Xxxxxxxx-Xxxxx Act; (ii) it is their opinion that the financial statements and supporting
schedules included in the Registration Statement and covered by their opinion therein comply as to
form in all material respects with the applicable accounting requirements of the Securities Act and
the Securities Act Regulations; (iii) based upon limited procedures as agreed upon by the Agent and
Xxxxxxx & Company set forth in detail in such letter, nothing has come to their attention which
causes them to believe that (A) the unaudited financial statements and supporting schedules of the
Bank included in the Registration Statement and the General Disclosure Package, including the
Prospectus, do not comply as to form in all material respects with the applicable accounting
requirements of the Securities Act, the Securities Act Regulations and the Conversion Regulations
or are not presented in conformity with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial statements included in the Registration
Statement and the General Disclosure Package, including the Prospectus, (B) the unaudited amounts
of net interest income and net income set forth under “Selected Consolidated Financial and Other
Data” or under “Recent Developments” in the Registration Statement and Prospectus do not agree with
the amounts set forth in unaudited financial statements as of and for the dates and periods
presented under such caption or such amounts were not determined on a basis substantially
consistent with that used in determining the corresponding amounts in the audited financial
statements included in the Registration Statement, (C) at a specified date not more than five days
prior to the date of this Agreement, there has been any increase in the long-term or short-term
debt of the Bank or any decrease in total assets, the allowance for loan losses, total deposits or
retained earnings of the Bank, in each case as compared with the amounts shown in the balance sheet
included in the Registration Statement or, (D) during the period from September 30, 2010 to a
specified date not more than five days prior to the date of this Agreement, there were any
decreases, as compared with the corresponding period in the preceding fiscal year, in total
interest income, net interest income, net interest income after provision for loan losses, income
before income tax expense or net income of the Bank, except in all instances for increases or
decreases which the Registration Statement and the General Disclosure Package, including the
Prospectus, disclose have occurred or may occur; and (iv) in addition to the examination referred
to in their opinions and the limited
-31-
procedures referred to in clause (iii) above, they have carried out certain specified
procedures, not constituting an audit, with respect to certain amounts, percentages and financial
information which are included in the Registration Statement and the General Disclosure Package,
including the Prospectus, and which are specified by the Agent, and have found such amounts,
percentages and financial information to be in agreement with the relevant accounting, financial
and other records of the Company and the Bank identified in such letter.
(g) At Closing Time, the Agent shall have received from Xxxxxxx & Company a letter, dated as
of Closing Time, to the effect that they reaffirm the statements made in the letter furnished
pursuant to subsection (f) of this Section, except that the specified date referred to shall be a
date not more than five days prior to Closing Time.
(h) At Closing Time, the Securities shall have been approved for trading on the OTC Bulletin
Board upon notice of issuance, provided that the Agent has timely filed the application for such
trading.
(i) At Closing Time, the Agent shall have received a letter from the Appraiser, dated as of
the Closing Time, confirming its appraisal.
(j) At Closing Time, counsel for the Agent shall have been furnished with such documents and
opinions as they may require for the purpose of enabling them to pass upon the issuance and sale of
the Securities as herein contemplated and related proceedings, or in order to evidence the accuracy
of any of the representations or warranties, or the fulfillment of any of the conditions, herein
contained; and all proceedings taken by the Company in connection with the issuance and sale of the
Securities as herein contemplated shall be satisfactory in form and substance to the Agent and
counsel for the Agent.
(k) At any time prior to Closing Time, (i) there shall not have occurred any material adverse
change in the financial markets in the United States or elsewhere or any outbreak of hostilities or
escalation thereof or other calamity or crisis the effect of which, in the judgment of the Agent,
are so material and adverse as to make it impracticable to market the Securities or to enforce
contracts, including subscriptions or orders, for the sale of the Securities, and (ii) trading
generally on either the New York Stock Exchange or the Nasdaq Stock Market shall not have been
suspended, and minimum or maximum prices for trading shall not have been fixed, or maximum ranges
for prices for securities have been required, by either of said Exchanges or by order of the
Commission or any other governmental authority, and a banking moratorium shall not have been
declared by Federal, New York or Maryland authorities.
(a) The Company and the Bank, jointly and severally, agree to indemnify and hold harmless the
Agent, each person, if any, who controls the Agent, within the meaning of Section
-32-
15 of the Securities Act or Section 20 of the Exchange Act, and its respective partners,
directors, officers, employees and agents as follows:
(i) from and against any and all loss, liability, claim, damage and expense whatsoever,
as incurred, related to or arising out of the Offerings or any action taken by the Agent
where acting as agent of the Company or the Bank or otherwise as described in Section 2
hereof; provided, however, that this indemnity agreement shall not apply to any loss,
liability claim, damage or expense found in a final judgment by a court of competent
jurisdiction to have resulted primarily from bad faith, willful misconduct or gross
negligence of the Agent;
(ii) from and against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, based upon or arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement the General Disclosure
Package, any Issuer — Represented Free or Limited Use Free Writing Prospectus, when
considered together with the General Disclosure Package, or any amendment or supplement
thereto, or the omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading or arising out of
any untrue statement or alleged untrue statement of a material fact contained in the
Prospectus or the General Disclosure Package or any Issuer — Represented Free Writing or
Limited Use Free Writing Prospectus (or any amendment or supplement thereto) or the omission
or alleged omission therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not misleading;
(iii) from and against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any
litigation, or any investigation or proceeding by any governmental agency or body, commenced
or threatened, or of any claim whatsoever described in clauses (i) or (ii) above, if such
settlement is effected with the written consent of the Company or the Bank, which consent
shall not be unreasonably withheld; and
(iv) from and against any and all expense whatsoever, as incurred (including, subject
to Section 6(c) hereof, the fees and disbursements of counsel chosen by the Agent),
reasonably incurred in investigating, preparing for or defending against any litigation, or
any investigation, proceeding or inquiry by any governmental agency or body, commenced or
threatened, or any claim pending or threatened whatsoever described in clauses (i) or (ii)
above, to the extent that any such expense is not paid under (i), (ii) or (iii) above;
provided, however, that the indemnification provided for in this paragraph (a) shall not apply to
any loss, liability, claim, damage or expense to the extent (i) it arises out of any untrue
statement
-33-
or alleged untrue statement of a material fact contained in the Prospectus or the General
Disclosure Package or any Issuer — Represented Free Writing Prospectus or Issuer — Represented
Limited Use Free Writing Prospectus (or any amendment or supplement thereto), or the omission or
alleged omission therefrom of a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading which was made in
reliance upon and in conformity with the Agent Information.
(b) The Agent agrees to indemnify and hold harmless the Company, the Bank, their directors,
each of their officers who signed the Registration Statement, and each person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act against any and all loss, liability, claim, damage and expense described in the indemnity
contained in subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, of a material fact made in the
Prospectus or the General Disclosure Package or any Issuer — Represented Free Writing Prospectus
or Issuer — Represented Limited Use Free Writing Prospectus (or any amendment or supplement
thereto), in reliance upon and in conformity with the Agent Information.
(c) Each indemnified party shall give notice as promptly as reasonably practicable to each
indemnifying party of any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such indemnifying party
from any liability which it may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of any such action. In no
event shall the indemnifying parties be liable for fees and expenses of more than one counsel (in
addition to no more than one local counsel in each separate jurisdiction in which any action or
proceeding is commenced) separate from their own counsel for all indemnified parties in connection
with any one action or separate but similar or related actions in the same jurisdiction arising out
of the same general allegations or circumstances.
(d) The Company and the Bank also agree that the Agent shall not have any liability (whether
direct or indirect, in contract or tort or otherwise) to the Bank, the Company, its security
holders or the Bank’s or the Company’s creditors relating to or arising out of the engagement of
the Agent pursuant to, or the performance by the Agent of the services contemplated by, this
Agreement, except to the extent that any loss, claim, damage or liability is found in a final
judgment by a court of competent jurisdiction to have resulted primarily from the Agent’s bad
faith, willful misconduct or gross negligence.
(e) In addition to, and without limiting, the provisions of Section (6)(a)(iv) hereof, in the
event that the Agent, any person, if any, who controls the Agent within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act or any of its partners, directors,
officers, employees or agents is requested or required to appear as a witness or
-34-
otherwise gives testimony in any action, proceeding, investigation or inquiry brought by or on
behalf of or against the Company, the Bank, the Agent or any of its respective affiliates or any
participant in the transactions contemplated hereby in which the Agent or such person or agent is
not named as a defendant, the Company and the Bank jointly and severally agree to reimburse the
Agent or such other person for all reasonable and necessary out-of-pocket expenses incurred by it
or them in connection with preparing or appearing as a witness or otherwise giving testimony and to
compensate the Agent and such other persons in an amount to be mutually agreed upon.
Section 7. Contribution. In order to provide for just and equitable contribution in circumstances in which
the indemnity agreement provided for in Section 6 hereof is for any reason held to be unenforceable
by the indemnified parties although applicable in accordance with its terms, the Company, the Bank
and the Agent shall contribute to the aggregate losses, liabilities, claims, damages and expenses
of the nature contemplated by said indemnity agreement incurred by the Company or the Bank and the
Agent, as incurred, in such proportions (i) that the Agent is responsible for that portion
represented by the percentage that the maximum aggregate marketing fees in the Offerings bears to
the maximum aggregate gross proceeds in the Offerings and the Company and the Bank are jointly and
severally responsible for the balance or (ii) if, but only if, the allocation provided for in
clause (i) is for any reason held unenforceable, in such proportion as is appropriate to reflect
not only the relative benefits to the Company and the Bank on the one hand and the Agent on the
other, as reflected in clause (i), but also the relative fault of the Company and the Bank on the
one hand and the Agent on the other, as well as any other relevant equitable considerations;
provided, however, that no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section, each person, if any,
who controls the Agent within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act shall have the same rights to contribution as the Agent, and each director of the
Company, each director of the Bank, each officer of the Company who signed the Registration
Statement, and each person, if any, who controls the Company or the Bank within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to
contribution as the Company and the Bank. Notwithstanding anything to the contrary set forth
herein, to the extent permitted by applicable law, in no event shall the Agent be required to
contribute an aggregate amount in excess of the aggregate marketing fees to which the Agent is
entitled and actually paid pursuant to this Agreement.
Section 8. Representations, Warranties and Agreements to Survive Delivery. All representations, warranties
and agreements contained in this Agreement, or contained in certificates of officers of the Company
or the Bank submitted pursuant hereto, shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of any
-35-
Agent or controlling person, or by or on behalf of the Company, and shall survive delivery of the
Securities.
(a) The Agent may terminate this Agreement, by notice to the Company, at any time at or prior
to Closing Time (i) if there has been, since the date of this Agreement or since the respective
dates as of which information is given in the Registration Statement, any material adverse change
in the financial condition, results of operations, business affairs or prospects of the Company or
the Bank, or the Company and the Bank considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse change in the
financial markets in the United States or elsewhere or any outbreak of hostilities or escalation
thereof or other calamity or crisis the effect of which, in the judgment of the Agent, are so
material and adverse as to make it impracticable to market the Securities or to enforce contracts,
including subscriptions or orders, for the sale of the Securities, (iii) if trading generally on
the Nasdaq Stock Market or the New York Stock Exchange has been suspended, or minimum or maximum
prices for trading have been fixed, or maximum ranges for prices for securities have been required,
by either of said Exchanges or by order of the Commission or any other governmental authority, or
if a banking moratorium has been declared by either Federal, New York or Maryland authorities, (iv)
if any condition specified in Section 5 shall not have been fulfilled when and as required to be
fulfilled; (v) if there shall have been such material adverse change in the condition or prospects
of the Company or the Bank or the prospective market for the Company’s securities as in the Agent’s
good faith opinion would make it inadvisable to proceed with the offering, sale or delivery of the
Securities; (vi) if, in the Agent’s good faith opinion, the price for the Securities established by
the Appraiser is not reasonable or equitable under then prevailing market conditions, or (vii) if
the Conversion is not consummated on or prior to June 30, 2011.
(b) If this Agreement is terminated pursuant to this Section, such termination shall be
without liability of any party to any other party except as provided in Sections 2 and 4 hereof
relating to the reimbursement of expenses and except that the provisions of Sections 6 and 7 hereof
shall survive any termination of this Agreement.
Section 10. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to
have been duly given if mailed or transmitted by any standard form of telecommunication. Notices
to the Agent shall be directed to the Agent at 000 Xxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: General Counsel, with a copy to SNR Xxxxxx US LLP, 0000 X Xxxxxx, X .X., Xxxxx
000, Xxxx Xxxxx, Xxxxxxxxxx, XX 00000, Attention: Xxxxxxx Xxxxxxx; notices to the Company and the
Bank shall be directed to either of them at 000 Xxxxxxxxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxxxxx 00000,
attention of Xxxxxx X. Xxxxxxx, Chairman
-36-
and Chief Executive Officer with a copy to Xxxxxxxxxx Xxxxxxxx, L.L.P., 000 00xx Xxxxxx, X.X.,
Xxxxx 000, Xxxxxxxxxx, XX 00000, attention Xxxx X. Xxxxxxxxx.
Section 11. Parties. This Agreement shall inure to the benefit of and be binding upon the Agent, the Company
and the Bank and their respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other than the Agent, the
Company and the Bank and their respective successors and the controlling persons and partners, and
officers and directors referred to in Sections 6 and 7 and their heirs and legal representatives,
any legal or equitable right, remedy or claim under or in respect of this Agreement or any
provision herein or therein contained. This Agreement and all conditions and provisions hereof and
thereof are intended to be for the sole and exclusive benefit of the Agent, the Company and the
Bank and their respective successors, and said controlling persons and partners and officers and
directors and their heirs and legal representatives, and for the benefit of no other person, firm
or corporation.
Section 12. Entire Agreement; Amendment. This Agreement represents the entire understanding of the parties
hereto with reference to the transactions contemplated hereby and supersedes any and all other oral
or written agreements heretofore made, except for those sections of the Engagement Letter
Agreement, relating to the Agent’s providing record management services to the Company and the Bank
in connection with the Conversion and the section entitled “Confidentiality” in the engagement
letter dated October 15, 2010, by and between the Agent, the Company and the Bank relating to
offering services. No waiver, amendment or other modification of this Agreement shall be effective
unless in writing and signed by the parties hereto.
Section 13. Governing Law and Time. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to agreements made and to be performed in said State
without regard to the conflicts of laws provisions thereof. Unless otherwise noted, specified
times of day refer to Eastern time.
Section 14. Severability. Any term or provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms and provisions of
this Agreement or affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is enforceable.
Section 15. Headings. Sections headings are not to be considered part of this Agreement, are for convenience
and reference only, and are not to be deemed to be full or accurate descriptions of the contents of
any paragraph or subparagraph.
-37-
If the foregoing is in accordance with your understanding of our agreement, please sign and
return to the Company a counterpart hereof, whereupon this instrument, along with all counterparts,
will become a binding agreement between the Agent, the Company and the Bank in accordance with its
terms.
| Very truly yours, FRATERNITY COMMUNITY BANCORP, INC. |
||||
| By: | ||||
| Name: | Xxxxxx X. Xxxxxxx | |||
| Title: | Chairman and Chief Executive Officer | |||
| FRATERNITY FEDERAL SAVINGS AND LOAN ASSOCIATION |
||||
| By: | ||||
| Name: | Xxxxxx X. Xxxxxxx | |||
| Title: | Chairman and Chief Executive Officer | |||
| CONFIRMED AND ACCEPTED, as of the date first above written: Sandler X’Xxxxx & Partners, L.P. |
||||
| By: | Sandler X’Xxxxx & Partners Corp., | |||
| the sole general partner | ||||
| By: | ||||
| Name: | Xxxxxxxxxxx X. XxXxxxxx | |||
| Title: | Authorized Signatory | |||
APPENDIX A
(i) The Company has been duly incorporated and is validly existing as a corporation under the
laws of the State of Maryland.
(ii) The Bank is validly existing as a federal savings bank chartered under the laws of the
United States of America and, at the Closing Time, will be duly organized and validly existing in
stock form.
(iii) The Bank has the authority to transact business in the State of Maryland.
(iv) Each of the Company and the Bank has the full corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the Registration Statement
and the General Disclosure Package, including the Prospectus, and to enter into and perform its
obligations under this Agreement and the transactions contemplated hereby.
(v) The authorized capital stock of the Company consists of 15,000,000 shares of Common Stock,
par value $0.01 per share, and 1,000,000 shares of preferred stock, par value $0.01 per share, of
which, to such counsel’s actual knowledge, no shares are issued and outstanding; immediately upon
consummation of the Conversion and the Offerings the issued and outstanding capital stock of the
Company will be within the range set forth in the Prospectus under “Capitalization”.
(vi) Immediately upon consummation of the Conversion and the Offerings, the authorized capital
stock of the Bank will consist of [ ] shares of common stock, par value $1.00 per share,
and [ ] shares of serial preferred stock, par value $1.00 per share, and the issued and
outstanding capital stock of the Bank will be [ ] shares of Bank Common Stock; when issued
in accordance with the Plan, all of the issued and outstanding capital stock of the Bank will be
duly authorized and validly issued, fully paid and non-assessable and owned beneficially and of
record by the Company, to such counsel’s actual knowledge, free and clear of any security interest,
mortgage, pledge, lien or encumbrance. The issuance of such Bank Common Stock to the Company was
exempt from registration under the Securities Act pursuant to Section (3)(a)(5) thereof.
(vii) The Securities have been duly authorized for issuance and sale, and when issued and
delivered by the Company pursuant to the Plan against payment of the consideration calculated as
set forth in the Plan, will be validly issued, fully paid and nonassessable.
(viii) The issuance of the Securities is not subject to preemptive rights arising by operation
of federal or state laws and regulations or the Company’s articles of incorporation, except for
subscription rights granted pursuant to the Plan in accordance with OTS Regulations.
Appendix A-1
(ix) To such counsel’s actual knowledge, the Company and the Bank have conducted the Offerings
in accordance with applicable requirements of the Conversion Regulations (except to the extent that
the requirements to comply therewith was specifically waived by the OTS) and the Plan, and have
satisfied all conditions precedent to the issuance of the Securities imposed upon them by the OTS
under the terms of the OTS’s written approval of the Conversion Application.
(x) The Bank is a member in good standing of the Federal Home Loan Bank of Atlanta, and the
deposit accounts of the Bank are insured by the FDIC up to the applicable limits.
(xi) The Subsidiaries are validly existing as a corporation and a limited liability company in
good standing under the laws of the jurisdictions of their incorporation or organization, as
applicable, and the Subsidiaries have full power and authority to own, lease and operate their
properties and to conduct their business as described in the Registration Statement; the activities
of the Subsidiaries as described in the Prospectus are permitted to subsidiaries of a savings and
loan holding company and of a federally chartered savings bank by the rules, regulations,
resolutions and practices of the OTS; all of the issued and outstanding capital stock or membership
interests of the Subsidiaries, if any, has been duly authorized and validly issued, is fully paid
and non-assessable and, to such counsel’s actual knowledge, is owned by the Bank, directly, free
and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity.
(xii) The OTS has approved the Holding Company Application and the Conversion Application; to
such counsel’s actual knowledge, such approvals remain in full force and effect and no action by
the OTS to suspend the effectiveness of such approvals or to suspend the Offerings is pending or
threatened; the Holding Company Application and the Conversion Application comply as to form in all
material respects with the applicable requirements of the application Form H-(e)1-S and Form AC, as
the case may be (it being understood, however, that (i) no opinion need be rendered with respect to
the financial statements and schedules, notes to financial statements, stock valuation information
or other financial and statistical data included in, or omitted from, the Holding Company
Application or the Conversion Application, (ii) in passing upon the compliance as to form of the
Holding Company Application and the Conversion Application, counsel need not assume any
responsibility for the accuracy, completeness or fairness of the statements contained therein
except as otherwise provided in such counsel’s opinion, and (iii) no opinion need be rendered with
respect to the business plan or the appraisal report); such applications include all documents
required to be filed as exhibits thereto; and, to such counsel’s actual knowledge, no person has
sought to obtain review of the final action of the OTS in approving the Holding Company Application
or the Conversion Application.
Appendix A-2
(xiii) The execution and delivery of this Agreement, the incurrence of the obligations therein
set forth, and the consummation of the transactions contemplated hereby, (A) have been duly
authorized by all necessary corporate action on the part of each of the Company and the Bank, (B)
will not violate the articles of incorporation, charter, articles of organization or bylaws or
operating agreement of the Company, the Bank or the Subsidiaries, and (C) will not result in a
breach of or default, or result in the creation of any lien, charge or encumbrance under any
agreement filed as an exhibit to the Registration Statement.
(xiv) This Agreement constitutes the legal, valid and binding agreement of each of the Company
and the Bank, enforceable in accordance with its terms, except as rights to indemnity and
contribution thereunder may be limited under applicable law, and subject to the qualification that
(i) enforcement thereof may be limited by bankruptcy, insolvency, moratorium, reorganization or
other laws (including the laws of fraudulent conveyance) or judicial decisions affecting the
enforceability of creditors’ rights generally or the rights of creditors of savings banks or
financial institutions, the accounts of which are insured by the FDIC, or holding companies
thereof, and (ii) enforcement thereof is subject to general equity principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law) and to the effect of
certain laws and judicial decisions upon the availability of injunctive relief and enforceability
of equitable remedies, including the remedies of specific performance and self-help.
(xv) The Registration Statement has been declared effective by the Commission under the
Securities Act, and such counsel has been advised by the Commission’s staff that no stop order
suspending the effectiveness of the Registration Statement has been issued under the Securities Act
and that no proceedings for such purpose have been initiated or threatened by the Commission.
(xvi) The Prospectus has been declared effective and the Proxy Statement has been cleared by
the OTS, and such counsel has been advised by the OTS’ staff that no order suspending such
effectiveness of the Prospectus or clearance of the Proxy Statement has been issued by the OTS and
that no proceedings for such purpose have been initiated or threatened by the OTS.
(xvii) No further approval, authorization, consent or other order of any public board or body
is required in connection with the execution and delivery of this Agreement and the issuance of the
Securities pursuant to the Plan, except as may be required under the securities or “Blue Sky” laws
of various jurisdictions as to which no opinion need be rendered.
(xviii) At the time the Registration Statement became effective, the Registration Statement
complied as to form in all material respects with the applicable requirements under the Securities
Act and the Securities Act Regulations; it being understood, however, that (i) no opinion need be
rendered with respect to the financial statements and schedules, notes to financial statements,
stock valuation information or other financial and statistical data included
Appendix A-3
in, or omitted from, the Registration Statement and (ii) in passing upon the compliance as to
form of the Registration Statement, such counsel may assume that the statements made therein are
correct and complete, except as otherwise set forth in paragraph (xxii).
(xix) The form of certificate used to evidence the Common Stock complies with the requirements
of Maryland law.
(xx) There are no legal or governmental proceedings pending or to such counsel’s actual
knowledge, threatened against or affecting the Company, the Bank or any Subsidiary which are
required to be disclosed in the Registration Statement and Prospectus, other than those disclosed
therein.
(xxi) The statements in the Prospectus under the captions “Our Dividend Policy,” “Regulation
and Supervision,” “Federal and State Taxation,” “The Conversion and Stock Offering — Effects of
Conversion to Stock Form,” “— Material Income Tax Consequences,” “— Restrictions on Repurchase of
Stock,” “-Restrictions on Transfer of Shares After the Conversion Applicable to Officers and
Directors,” “Restrictions on the Acquisition of Fraternity Community Bancorp and Fraternity Federal
Savings and Loan Association,” “Description of Fraternity Community Bancorp Capital Stock” and
“Registration Requirements” insofar as they purport to summarize matters of law or to describe
documents referred to therein, are accurate summaries and descriptions in all material respects.
(xxii) To such counsel’s actual knowledge, there are no contracts or documents of a character
required to be described in the Registration Statement or Prospectus or to be filed as exhibits
thereto that are not described or filed, and the descriptions thereof or references thereto are
correct in all material respects and, except as described in the Prospectus, no default exists, and
no event has occurred which, with notice or lapse of time or both, would constitute a default, in
the due performance or observance of any material obligation, agreement or covenant contained in
any contract or document so described or filed.
(xxiii) The Plan has been duly authorized by all necessary corporate action by the Company and
the Bank.
(xxiv) To such counsel’s actual knowledge, the Company, the Bank and the Subsidiaries are
currently not in violation of their respective articles of incorporation, charter, articles of
organization, bylaws and operating agreement.
(xxv) The Company is not and, after giving effect to the offer and the sale of the Securities and
the application of the net proceeds as described in the Prospectus under the caption “Use of
Proceeds”, will not be, required to be registered as an “investment company” as such term is
defined in the Investment Company Act of 1940, as amended.
Appendix A-4
EXHIBIT A
FORM OF SELECTED DEALERS AGREEMENT
Up to 1,380,000 Shares
(Maximum Offered to be Sold and Issued in Conversion, subject
to increase up to 1,587,000 shares
under certain circumstances)
to increase up to 1,587,000 shares
under certain circumstances)
Common Stock
(Par Value $0.01 Per Share)
(Par Value $0.01 Per Share)
SELECTED DEALER’S AGREEMENT
______________, 200__
Ladies and Gentlemen:
We have agreed to assist Fraternity Community Bancorp, Inc., a Maryland corporation (the
“Company”) in connection with the offer for sale and issuance of shares (the “Shares”) of common
stock, par value $0.01 per share, of the Company, to be issued in connection with the conversion
and reorganization of Fraternity Federal Savings and Loan Association, a federal savings bank (the
“Bank”), from the mutual to stock holding company form of organization. The Company, in connection
with its plan to effect such conversion, offered for sale up to 1,380,000 shares for subscription
by the Company’s and the Bank’s employee stock ownership plan and certain of the Bank’s depositors
and borrowers, in a subscription offering, and certain members of the general public in a
concurrent direct community offering. The shares which were not subscribed for pursuant to such
subscription and direct community offerings are being offered to the public in a syndicated
community offering (the “Syndicated Community Offering”) in accordance with the rules of the Office
of Thrift Supervision. The Shares, the bases on which the number of Shares to be issued may
change, and certain of the terms on which they are being offered are more fully described in the
enclosed Prospectus (the “Prospectus”).
We are offering to Selected Dealers (of which you are one) the opportunity to
participate in the solicitation of offers to buy the Shares in the Syndicated Community Offering,
and we will pay you a fee in the amount of _____________ percent (______%) of the dollar amount of
the Shares sold on behalf of the Company by you. The number of Shares sold by you shall be
determined based on the authorized designation of your firm on the order form or forms for such
Shares accompanying the funds transmitted for payment therefor (whether in the form of a check
payable to the Bank or a withdrawal from an existing account at the Bank) to the special account
Exhibit A-1
established by the Company for the purpose of holding such funds. It is understood, of course,
that payment of your fee will be made only out of compensation received by us for the Shares sold
on behalf of the Company by you, as evidenced in accordance with the preceding sentence. The Bank
has requested us to invite you to become a “Sponsoring Dealer,” that is, a Selected Dealer who
solicits offers which result in the sale on behalf of the Bank of at least ____ shares. You may
become a Sponsoring Dealer (subject to your fulfillment of the requirement in the preceding
sentence) by checking the box on the confirmation at the end of this letter. If you become a
Sponsoring Dealer, you shall be entitled to an additional fee in the amount of _____ percent
(_____%) of the dollar amount of the Shares sold on behalf of the Company by you as evidenced in
the manner set forth above.
Each order form for the purchase of Shares must set forth the identity, address and tax
identification number of each person ordering Shares regardless of whether the Shares will be
registered in street name or in the purchaser’s name. Such order form should clearly identify your
firm.
As soon as practicable after all the Shares are sold, we will remit to you, out of our
compensation as provided above, the fees to which you are entitled hereunder, including your
Sponsoring Dealer fee.
This offer is made subject to the terms and conditions herein set forth and is made only to
Selected Dealers which are (i) members in good standing of the Financial Industry Regulatory
Authority (“FINRA”) which agree to comply with all applicable interpretative materials, FINRA Rules
and the National Association of Securities Dealers, Inc.’s (“NASD”) Conduct Rules, including,
without limitation, NASD’s Interpretation with Respect to Free-Riding and Withholding and Rule 2740
of the NASD’s Conduct Rules, or (ii) foreign dealers not eligible for membership in FINRA which
agree (A) not to sell any Shares within the United States, its territories or possessions or to
persons who are citizens thereof or resident therein and (B) in making other sales to comply with
the above-mentioned NASD Rules 2730, 2740 and 2750 of the above-mentioned Conduct Rules and FINRA
Rule 2790 as if they were FINRA members and Rule 2420 of such NASD Conduct Rules as it applies to
non-member brokers or dealers in a foreign country.
Orders for Shares will be strictly subject to confirmation and we, acting on behalf of the
Company, reserve the right in our absolute discretion to reject any order in whole or in part, to
accept or reject orders in the order of their receipt or otherwise, and to allot. Neither you nor
any other person is authorized by the Company, the Bank or by us to give any information or make
any representations other than those contained in the Prospectus in connection with the offering
and sale of any of the Shares. No Selected Dealer is authorized to act as agent for us when
soliciting offers to buy the Shares from the public or otherwise. No Selected Dealer shall engage
in any stabilizing (as defined in Regulation M promulgated under the Securities Exchange Act of
Exhibit A-2
1934, as amended (the “Exchange Act”)) with respect to the Company’s common stock during the
offering.
We and each Selected Dealer assisting in selling Shares pursuant hereto agree to comply with
the applicable requirements of the Exchange Act, and applicable rules and regulations issued by the
Securities and Exchange Commission (the “SEC”). In addition, we and each Selected Dealer confirm
that the SEC interprets Rule 15c2-8 promulgated under the Exchange Act as requiring that a
prospectus be supplied to each person who is expected to receive a confirmation of sale at least 48
hours prior to delivery of such person’s order form.
We and each Selected Dealer further agree to the extent that our customers desire to
pay for Shares with funds held by or to be deposited with us, in accordance with the interpretation
of the SEC Rule 15c2-4 promulgated under the Exchange Act either (a) upon receipt of an executed
order form or direction to execute an order form on behalf of a customer to forward the Syndicated
Community Offering price for the Shares ordered on or before 12:00 p.m. on the business day
following receipt or execution of an order form by us to the Bank for deposit in a segregated
account or (b) to solicit indications of interest in which event (i) we will subsequently contact
any customers indicating interest to confirm the interest and give instructions to execute and
return an order form or to receive authorization to execute an order form on their behalf, (ii) we
will mail acknowledgments of receipt of orders to each customer confirming interest on the
business day following such confirmation, (iii) we will debit accounts of such customers on the
fifth business day (the “debit date”) following receipt of the confirmation referred to in (i) and
(iv) we will forward completed order forms together with such funds to the Bank on or before 12:00
p.m. on the next business day following the debit date for deposit in a segregated account. We
acknowledge that if the procedure in (b) is adopted, our customer’s funds are not required to be in
their accounts until the debit date. We and each Selected Dealer further acknowledge that, in
order to use the foregoing “sweep arrangements,” we comply with the net capital requirements for
broker/dealers under Rule 15c3-1(a)(1) of the Exchange Act.
Unless earlier terminated by us, this Agreement shall terminate 45 full business days after
the date hereof, but may be extended by us for an additional period or periods not exceeding 30
full business days in the aggregate. We may terminate this Agreement or any provisions hereof at
any time by written or telegraphic notice to you. Of course, our obligations hereunder are subject
to the successful completion of the offering, including the sale of all of the Shares.
You agree that at any time or times prior to the termination of this Agreement you will, upon
our request, report to us the number of Shares sold on behalf of the Company by you under this
Agreement.
Exhibit A-3
We shall have full authority to take such actions as we may deem advisable in respect to all
matters pertaining to the offering. We shall be under no liability to you except for lack of good
faith and for obligations expressly assumed by us in this Agreement.
Upon application to us, we will inform you as to the states in which we believe the Shares
have been qualified for sale under, or are exempt from the requirements of, the respective blue sky
laws of such states, but we assume no responsibility or obligation as to your rights to sell Shares
in any state.
Additional copies of the Prospectus and any supplements thereto will be supplied in reasonable
quantities upon request.
Any notice from us to you shall be deemed to have been duly given if mailed, telephoned or
telegraphed to you at the address to which this Agreement is mailed.
Exhibit A-4
This Agreement shall be construed in accordance with the laws of New York.
Please confirm your agreement hereto by signing and returning the confirmation accompanying
this letter at once to us at Sandler X’Xxxxx & Partners, L.P., 000 Xxxxx Xxxxxx, 0xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000. The enclosed duplicate copy will evidence the agreement between
us.
| Very truly yours, SANDLER X’XXXXX & PARTNERS, L.P. |
||||
| By: | Sandler X’Xxxxx & Partners Corp., | |||
| the sole general partner | ||||
| By: | ||||
Exhibit A-5
Sandler X’Xxxxx & Partners, L.P.
000 Xxxxx Xxxxxx — 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
000 Xxxxx Xxxxxx — 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
| Re: | _____________________ |
Ladies and Gentlemen:
We hereby confirm our agreement to all the terms and conditions stated in the foregoing
letter. We acknowledge receipt of the Prospectus relating to the Shares and we further state that
in agreeing thereto we have relied upon the Prospectus and no other statement whatsoever, written
or oral. We confirm that we are (i) a member on good standing of the Financial Industry Regulatory
Authority (“FINRA”), and agree to comply with all applicable interpretative materials, FINRA Rules
and the National Association of Securities Dealers, Inc.’s (“NASD”) Conduct Rules, including,
without limitation, the NASD’s “Interpretation With Respect to Free-Riding and Withholding” and
Rule 2740 of the NASD’s Conduct Rules, or (ii) a foreign dealer not eligible for membership in the
FINRA and agree (A) not to sell any Shares of Fraternity Community Bancorp, Inc. within the United
States, its territories or possessions or to persons who are citizens thereof or resident therein
and (B) in making other sales to comply with the above-mentioned NASD Rules 2730, 2740 and 2750 of
the above-mentioned Conduct Rules and FINRA Rule 2790 as if we were an FINRA member and Rule 2420
of such Conduct Rules as it applies to a non-member broker or dealer in a foreign country.
[__] We wish to become a “Sponsoring Dealer.”
Dated: ______________________
|
(Please print or type name of firm |
||||
| By: | ||||
Exhibit A-6
